Succession planning is an aspect of long-term business planning that many small business owners often neglect. In most cases, entrepreneurs are so absorbed in running their business that they fail to consider to whom, how, or when they should pass their business on.
Unfortunately, many businesses fail because they do not properly plan for the future. In fact, 70% of family businesses do not survive into the next generation due to a lack of adequately preparing a successor. So, how exactly do you begin the process of succession planning?
Here are a few considerations to keep in mind:
- Identify a successor early on. If you have a candidate in mind, be it a family member, business partner, or an ideal employee, make sure you create a training and development plan, so they are equipped to lead in your stead when you leave.
- Determine how to distribute your property. Once you leave, be it by design or circumstance, you will need to state in your plan clearly how your business interests are to be divided. Will the wealth pass on to your family, or be reinvested into your business?
- Address outstanding debts and taxes. You should resolve any unfinished business in your succession plan as well. Essentially, you should leave clear instructions as to how your company should handle any fees or taxes once you’re gone.
- Consult a lawyer. To make sure your succession plan is legally binding and adheres to regulations, you should talk to a legal expert.
To learn more about succession planning, like how to write one or how the benefits of structuring a plan, check out the infographic below:
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Post submitted by Zach Painter
Edited by Temitope Adelekan