Tips for Effective Business Succession

When someone builds a business from the ground up, they may think they’ll be in control forever, but such thinking is unrealistic. Therefore, succession planning should be started as early as possible. Whether the owner intends to sell or pass the business on to a relative, a succession plan is crucial as it ensures the viability of the company while increasing the chance of a successful retirement. Below are four tips to start planning a business succession right away.

Include an Exit Strategy in the Business Plan

Odds are, the owner already has a plan for the next few years, but many forget to include an exit or succession strategy in the business plan. Owners should visit and they should answer a few questions when planning a succession, so they can decide what they want the company to look like after retirement, and determine whether there are systems in place to ensure smooth transitions in leadership. The sooner these issues are considered, the more time the business owner has to do things right.

Get the Family Involved

Whatever a company owner’s vision of the future may be, they should include family members in succession planning. Who may take over when the owner retires, and who is qualified to do so? Would it be better for an outsider to take over? The family should be included in the conversation, especially if a relative has the ambition to lead. By making intentions clear, business owners can avoid unnecessary strife in the family.

Assemble an Advisory Team

Business owners are experts on building and running a company, but they may not know enough about succession. A team of lawyers, accountants and succession planners can guide the owner through the complex process, but the owner must be ready to share information on the business’ current state as well as plans for succession.

Find and Train the Successor

Once the company owner starts to contemplate the future, they may feel inclined to choose a successor. However, the person taking over needs certain qualities in order to move the company to a higher level. Maybe a relative has the right qualities, or an employee can step in to take over. Decisions on succession should be made as soon as possible, so the owner can start training the person for the work ahead. By planning now, owners can ensure that the company will be around for many years to come.