What You Need to Include in Your Business Succession Plan

Building and maintaining a successful small business is not an easy thing to do, and it is, rightly, the signature achievement for many Americans whose hard work and determination over many years paid off. With that in mind, it can be a little puzzling when you consider that a significant portion of small business owners in this country—well over half—do not currently have a succession plan for handing the reins to the next generation of owners. Business succession planning is a vitally important task for entrepreneurs who want to efficiently pass off their company and have it survive for a long time. 

Don’t Wait to Begin Planning

As cheesy as it sounds, it’s never really too early to start thinking about how you want to transfer your ownership to the next owner. Many experts and business coaches recommend for business owners to start considering succession planning around 10 years before they wish to retire. 

What Do You Want to Do With Your Ownership Interest?

Before selecting a successor, you need to address some of the more technical aspects of the succession plan. Do you want to sell your ownership portion to a business partner, key employee, or family member? Do you want to simply transfer it to a loved one? Would you rather place your business on the market and sell it to the highest bidder? Answering this important question early on will contour the way you go about selecting your successor and tweaking your company’s financials to put it in the best position. 

If You Need to Select a New Manager, How Will You Choose the Next One?

Owners who have a hands-on role with their companies need to ensure that a qualified successor is ready to step into a managerial role. Before searching for the next torch bearer, lay out the desired credentials and traits of your ideal successor. When you find the right person, don’t simply throw him or her into the fire immediately. Beyond the routine training, consider having a transition period wherein your successor will gradually take on more responsibility while you slowly relinquish control. Few business owners abruptly leave their company in a solid succession plan. 

Speak With Your Family and Employees

The building block of an effective business succession is clear and effective communication. Make sure your team knows how much your company means to you and how dearly you want it to continue after you’re gone. If you plan to keep ownership in the family, make sure your children or other family members are up to the task and have the tools to succeed. 

Another important component of a business succession plan is speaking with the right experts. You might want to confer with your accountant, business coach, financial advisor, and, probably, your attorney. Not all attorneys can provide sage business advice in addition to effective legal counsel, but we would be honored to help you with both. Call our firm at (305) 227-4030 to speak with someone from our team about your legal needs.