Critical components of a business succession plan
Operating a business can be an incredible responsibility. It takes a considerable amount of time, money and personal commitment to start a business and keep it running.
Thus, it can be difficult to think about what will happen to your enterprise when you leave it. Will you close the doors? Sell it? Have someone else take the reins? Whatever you decide, it can be crucial to put your wishes down in writing in the form of a business succession plan.
What should be in your plan
When you think about the future of your business when you leave it, there are several details to consider. Thus, your plan can involve:
- Your chosen method of exit (e.g., selling or transferring the business to someone else)
- Names of your intended successors
- Protocols for resolving disputes
- Anticipated valuation and methods for appraising property
- Insurance selection
- Timeline for transition
It can also help identify the components of your business that you want or hope to preserve when you leave. Perhaps you have a specific approach to business or a corporate culture you want your successor to continue.
These elements work together to make the process of leaving your business easier – or at least clearer – for you, your partners, your clients and your employees.
What can happen when you don’t have a plan for succession
There is an old saying that “failing to plan is planning to fail.” If you do not take the time to create a plan for succession, you can be leaving your business unprotected and at risk of floundering or falling into the wrong hands.
Thus, having a plan can give you, your family and those involved in your business peace of mind.
If you are unsure how to start, consider looking at how other business owners approach succession planning. You can also consult a lawyer to explore the options that best fit your needs.
Whatever you decide in terms of succession planning, preparing for the future can be one of the best ways to protect yourself and your business in the years to come.