Perhaps you “learned the ropes” of your family business alongside your parents or grandparents in your youth. For decades now, you’ve been at the helm, and you’ve been thinking a lot about the future. You’re getting older, and you naturally want to make sure you have a solid business succession plan in place.
Various issues may be pertinent to your goals for a succession plan, whether you wish to execute one for your retirement or as part of the estate planning process, so that a smooth transfer of ownership and operations will take place after you die. There are several things to keep in mind in either case.
It is never too soon to draft a business succession plan
Whether you’re the owner of a small family business or a large corporation, the sooner you think about who you want to own and manage your business when your time ends, the more peace of mind you can have about the future. With regard to retirement, it’s best to start planning for succession at least a decade in advance, but as soon as possible, nonetheless.
Arrange learning sessions for younger workers
The voice of experience is a powerful teaching tool. If you’re passing your business onto a much younger generation, it would no doubt benefit them to meet with senior executives and veteran employees to discuss important topics, such as finances, day-to-day operations, customer service, employee benefits and more.
Giving less-experienced leaders the opportunity to ask questions and learn from those who have been at it for many more years helps them to be ready to step into their new roles when the time comes.
Ownership and management are two separate issues
You may want to transfer ownership of your business to one person, but he or she might not be fit to manage daily operations. There is no rule stating that a business owner must also be the executive manager. You can customize your business succession plan to fit your needs and ultimate, long-term goals for the company you worked so hard to build.
It’s best to avoid designating someone for a specific position without discussing the matter with him or her first. Just because you’ve always dreamed of passing your business down to your grandson, doesn’t necessarily mean that he wants to own it or run it.
Seek additional support as needed
You don’t have to go it alone when creating a business succession plan. You can discuss your plan with people who are well-versed in such topics, such as financial advisers and those who have helped others navigate the process before you. You can also review your plan periodically, in case any changes, updates or deletions are necessary.