The Importance of Creating
a Business Succession Plan
Small-business owners and owners close to retirement have an obligation to plan for their own and their employees’ future with the company. Business succession planning helps reach their goals for success. Business succession allows operators to leave the company with minimal issues. Regardless of whether you intend to exit your business in the next five to ten years, or you never intend to exit your business until the day you pass away, developing a business succession plan can benefit your business in a number of ways.
Business succession planning can certainly be difficult, as it involves complex legal, tax, and estate issues, and it’s important to plan ahead, maybe even before you feel like you need to. It’s crucial to reach out to an attorney who is experienced in the particulars of business succession planning. At the Law Office of Robert L. Firth, we’re ready to offer skilled guidance to help you put a solid plan in place. We proudly serve clients in Cathedral City, California, as well as Palm Springs, Palm Desert, and throughout the Coachella Valley.
What is a Business Succession Plan?
A business succession plan is a series of logistical and financial decisions regarding who will take over your business upon retirement, death, or disability. Usually, a document is written with specific instructions for changing ownership, with the goal to support everyone involved, from the owner down to the employees. This important guide is the business succession plan.
Decided or potential successors
A valuation
Funding
A timeline
Formalized standard operating procedures (SOPS)
Why is a Business Succession
Plan Important?
To be truly effective, succession plans must be created long before they are to be enacted. Among the many benefits of having a defined strategy, there are five key reasons to create your succession plan as soon as possible. By defining a succession plan, your company affords itself the time and preparation necessary to ensure a smooth leadership transition. The benefits of a succession plan can be enormous, and they provide the following advantages:
Mitigates risk
Identifies your most qualified future leaders
Provides continuity
Offers clear communication and alignment
Creates a structure for training and development
Maintains brand identity
Helps the company plan for the long-term
What are the Steps of
Creating a Succession Plan?
Document Your Succession Plan
You will need an experienced attorney to put your plans to paper. Every detail of the transition should be documented and recorded so that there are easy-to-follow guidelines for those tasked with putting your plan into place.
Define Your Priorities
Consider what’s most important to you for the future of your business. Then, convene a meeting to determine whether there are people on board with your plans and ensure they are committed to seeing your business plan through. Gauging everyone’s interests and expectations is key.
Employee Involvement
Employees should be involved with a business succession plan. Most business experts and professionals understand that employees make up an essential part of the company, and including them in the process – including being made aware of plans and shown various career paths within the company – will help employees trust the process as much as you do.
What Common Obstacles
Should be Mitigated?
Deciding Who to Promote
Being able to support your employees, candidates, and successors by giving them the proper education will help the process move forward smoothly.
Resisting Bias
When looking ahead in a succession plan, you may drift toward familiarity, which could lead to bias. But understanding that change can be beneficial will allow you to have the open-mindedness to support your current employees and potential candidates to be hired.
Company Morale
Succession can be a stressful and scary thing for current employees. Being open and creating a simple, organized plan can help company morale.
Comprehensive Business Succession Guidance in Cathedral City
Business succession planning helps to ease the transition between your ownership and ideas and the future owners of your business. With over 35 years of experience, our attorney at the Law Office of Robert L. Firth can guide you through the complicated process of creating a business succession plan to give you peace of mind. Contact our office in Cathedral City for an initial consultation.