As a business owner, you have at least a half million things to focus on at any given moment. Somewhere down the list is creating a plan for the succession of your business upon your eventual retirement or death. Who will run the business when you decide to step back? Who will succeed to the ownership of your business when you're gone? These are tough questions that need to be carefully considered, and it will likely take some time to work through and develop answers.
It can take years to develop an organization that is well-situated to carry on the business effectively, after you- the founder, the visionary, the source of the elbow grease that has built the business into the successful entity it is today-decide it is time to enjoy the fruits of your labor by pursuing other meaningful endeavors that perhaps have had to take a back burner while you ran the business.
Some of the key issues involved in business succession planning are:
- Transition of day-to-day management of operations to knowledgeable, key personnel in the organization;
- Transition of executive decision-making power to one or more competent, decisive leaders who will navigate through short- and long-term changes in the business, industry marketplace, and economy;
- Transfer of ownership, both control and economic value, to key employees, next generation of family members, or a third party.
In a perfect world, you would be assured the luxury of time to map out and execute your business succession plan. Whether you decide that the best solution is an outright sale to a third party, or transition of the business to certain employees or family members, you will need time to implement your plan. The groundwork necessary to accomplish this should be laid over several years prior to your anticipated exit date. This will make the transition of the business as successful, tax-efficient, and seamless as possible. Planning ahead will also maximize the potential return to your family from the many years of sweat equity you have invested to make it the successful business it is today.
Since our world isn't always perfect, until the business transition is complete, you should have an emergency plan that may be implemented in the event of an unforeseen event such as your untimely death or disability. Your emergency plan should be communicated to your trusted advisors, giving them guidance as to how to proceed to assist your family and key employees with the business transition in such a situation.
The most important step is the first one-contacting an attorney to start the business succession planning discussion. Your attorney and other business advisors will be able to listen to your goals and concerns, and present you with options for your succession plan. It may take some time for your ideas to take shape, but taking the time to contemplate the future of your business after your departure will be well worth it in the long run.