Anyone who has done it will tell you: starting your own business is never easy.
However, what most people haven’t heard is that leaving it can involve a number of challenges, too. This is why you absolutely must have a business succession plan.
What Is a Business Succession Plan?
Put simply, a business succession plan outlines how you’ll leave your company and whom you’ll leave it to. This might involve:
- Taking it public
- Handing it off to a family member
- Selling it
No matter which one you’ll be doing, you need to make sure you have a plan, so it is done the right way.
Even if you have no immediate plans for transitioning ownership of your company, it’s still wise to put together a plan that covers what will happen when you pass away.
The Simple Business Succession Plan Outline
While you’ll want to customize your business succession plan based on the unique features of your company and your personal goals, the following three steps will provide a helpful outline:
- Decide on a Successor: Whether you plan to sell, go public, or pass the torch to a family member, the “successor” is obvious. However, also think about whom you want at the helm if you pass away. Speak to this person beforehand to make sure they’re up to the task.
- Consider How You’ll Train Them: Even if the person or company taking over is highly competent, business succession planning should always involve some degree of training – just to make sure. This is especially true if you’ll keep some kind of interest in the company. You don’t want its value to drop because the new person in charge doesn’t know what they’re doing.
- Establish a Timetable: You and your successor need to be on the same page about succession. This includes ensuring they’ll be ready to take over when the company finally changes hands.
Again, everyone’s situation is going to be a bit different. If you’re selling, your timetable might actually extend past the date of succession if the new owner wants you to stay on as a consultant.
If you have no plans to move on anytime soon, but you’re creating a business succession plan for your will, you won’t have a deadline. You may want to develop some kind of training for the next in line, though.
Factor in Retirement
Your business succession plan may be the final step for you before retirement. In that case, you’ll want to think about all the things that you need to do while you still own your company before retiring.
For some of you, that will mean simply ensuring your finances are sufficient before letting go of your main source of income. For others, it might mean figuring out what this next step is going to entail.
Whatever you plan to do afterward, don’t leave this final step to chance. If you’d like help creating a business succession plan, contact Mooney Lyons today and let us help you with this vital process.
The information in this material is for general information only and is not intended to provide specific advice or recommendations for any individual.