We all start businesses hoping that it will be successful enough where we can retire one day. Having a succession plan in place is key to reaching that goal. Every business should have a comprehensive succession plan.
A succession plan involves making a plan for the eventual change in ownership and management of your business. In creating a succession plan it is important to not only think about your personal goals for retirement, but also what your company will look like when you leave it. Below are three considerations for starting your succession plan.
What are your personal and business goals?
Do you want to sell your business to your employees? Maybe you want your business to remain in the family. Perhaps you would like to sell your company to someone you don't know. All these questions will determine how you proceed in creating your succession plan.
It is important to start working on your business succession plan years before your retirement date. Ideally you should start your succession plan at least five years before your planned retirement date. Starting early will give you optimal time to create a strategy to make sure your business is ready to be sold or transferred. Having a well thought out plan also makes your business more attractive to potential buyers.
Face your mortality!
Thinking about your own mortality is hard to face, but necessary in succession planning. If you are 100% owner of your business, it will be negatively affected if you become disabled or upon your death. Having a plan in place before it is needed is important to make sure that the value of your business will remain, even if you are unable to continue managing it.
Charlotte Key is an attorney that focuses on business law, estate planning and probate law.