Business succession planning is an integral—and sometimes “sticky”—part of business simply because of the personalities and family dynamics that come into play during the process. While family dynamics may complicate the process, don’t let the inevitable personality clashes hold or delay your transition and planning; this course of action is an important part of business when a family member or partner is ready to retire or take a lesser role within your business.
Recognize the importance of the process.
Business succession planning is about more than appointing the successor or successors of your business. A solid business succession plan ensures 1) the transition of parties is set and legally sound; 2) financial details are handled to ensure the succession of partners can occur (without fear of an external takeover); 3) to ease the process should any partners pass away while in business; 4) an owner can exit the business, or take a lesser role, while having their financial investment recognized. While it’s easy to dismiss the process as a matter “for another day,” initiating and following through with a business succession plan is an essential part of running a business.
Don’t wait to start your business succession planning.
No one can predict the future; this is especially true in business. Start your business succession planning by discussing the future of your business with all parties that are affected by the transition—including parties that are not interested in carrying on the business. This could include all children of the owner, partner spouses, top company managers, and any other loyal employees INVESTED in the company. Once successors have been identified, and all parties vested in the transaction are comfortable with their future partnership, it’s time to initiate the process.
Be clear about expectations.
Both on the financial and human resources side of your business succession planning, be clear about the expectations during the transition—both for the owner and successors. Communicate clearly and openly with all parties. Set a clear time frame and communicate with all parties expectations during this period.
Consult an attorney.
To ensure that all legal and financial aspects of your business succession planning are anticipated and documented, consult an experienced attorney. Every business succession plan is unique; there is no “one size fits all” plan because the organization, finances, and parties involved are different. An attorney can customize your plan to fit where your business is at now, and where you want it to be in the future.
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