How to ensure a smooth succession
While succession is a common and complex problem for many business owners, most have not put adequate time into preparing for it. In fact, according to a 2016 survey of business owners, only 8 percent had a formal, written succession plan in place. This lack of preparation puts this group at significant risk should they exit the business sooner than expected. It’s important to set the company up for the next generation of leadership with a strong financial foundation, tax plan, and legal structure. If the company is being handed over to a family member, it’s crucial to have a development framework in place so that the individual has a leadership roadmap. Finally, be sure to communicate with employees early and often about succession plans, so that they remain loyal and are not caught by surprise.
Key Takeaways:
- Goals: What are they? Increasing wealth for your retirement or the business.
- Planning: Do the key players know who they are and what they should do.
- Knowledge: What is the real worth of your business and can you retain needed employees as you transition.
“As the saying goes, nothing is certain but death and taxes. For entrepreneurs, you can add “exiting the business,” whether through a sale, transfer to the next generation or their own passing.”