6 Keys to Successful Business Succession Planning

Planning for the future of your business can be fun and exciting. However, when you must consider that your business will someday go on without you, it may be tough to think about. Nonetheless, successful businesses consider what the future will hold and plan accordingly for the sake of the business, their personal legacy, or their families. Keeping these key aspects of business succession planning in mind can help you create a bright future for your business, even long after you have moved on.

  1. Consider the key roles in your business.

In some companies, particularly smaller businesses, you may be the most crucial person in your business because you literally do everything—from customer service to cleaning the bathrooms. Your succession plan may need to involve more than just you, however. For example, if you have several people designated to take care of various tasks or sections of the company, you will need to consider which roles are the most important or whether the company would survive without certain roles or individuals. If your business will suffer if you lose that person or position, then that is likely a key role that needs succession planning.

Of course, your role is likely going to play a big part in your plan. Can you assign some or all of the tasks you do to these other positions or individuals? When you are planning in a family business, you need to take a hard look at who is currently involved and whether you want to bring anyone else in. Will someone taking over for you create a gap in another part of the business? Determining who needs a plan will get your succession plan started on the right foot.

  1. Be practical. Consider retirement planning.

When you retire, you still need to have some income to fulfill your daily needs. Small and medium business owners sometimes forget that, if they do not already have a retirement plan set up that is separate from the business, they will still need income after they have passed on the business. For some companies, it works well to keep you on the payroll as a “consultant” or even as a part-time employee. Either way, you need to consider how or whether your business will play a role in your retirement income.

  1. Start the conversation.

You need to talk to potential candidates that may fill your role. Do they have the same vision for the business that you do? Are they interested in taking on additional responsibility? Would the role be better if it was split between two or more people? Having a frank discussion about planning not only heads off potential future problems, but it also lets the employee (or family member) know that they are being groomed to take over the company. It can help them plan accordingly. The last thing you want is to leave your company to someone who is not going to run it well or who simply does not want it!

  1. Is selling out a good idea?

Some business owners will sell their company upon retirement. The name may change and the entire mentality of the business may be altered, but the prior owner can do nothing about it. For some business owners, it is a refreshing change to not have to worry about how the company is doing because they have already been “bought out.” For others, this type of change can be a nightmare. Think about whether selling out, or even liquidating, might be an option for you—not only from a financial standpoint, but also from a mental or emotional one as well.

Planning ahead of time can take a lot of the guesswork out of succession planning, and we can help you get started. Contact Legacy Planning Law Group today.

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Written by Legacy Planning Law Group

Legacy Planning Law Group is dedicated to working with individuals and families to help protect the assets they have built throughout their life, and make everything simpler for families who have lost a loved one. We help thoughtful people achieve the peace of mind that comes with planning their personal legacy and passing on family harmony.