Business succession planning is the most logical, practical, and streamlined process for a small business owner to hand over the business to the next generation and exit the company. It can be just as important, if not more so, than estate planning because in many cases a business succession plan is initiated prior to the business owner’s death and can cause significant legal, financial, and emotional issues for all involved if not handled properly. The experienced business law attorneys at Bennett, Weston, LaJone & Turner understand the critical importance of a family business succession plan and how it can affect the future of your company in addition to the wellbeing of those you care about.
Succession Planning for Business
According to a 2016 Family Business Survey, 43% of all family-owned businesses do not have a succession plan in place. However, nearly three-quarters of the owners of these same businesses expect to pass their company to the next generation. The reason why many family-owned and operated businesses do not have a succession plan is because crafting this type of plan forces the current owner of the business to acknowledge that he or she will eventually retire and pass along the business to another person. In addition, oftentimes a business owner is deeply involved in the day-to-day activities of the company and simply does not carve out the time needed to create a business succession plan.
Creating a business succession plan for your company comes with many benefits and can help quell any future issues that may arise if a succession plan is not in place. First, it clarifies who will take over the business and what responsibilities the next generation will have within the company. Next, it can create an exit strategy for the current owner that will allow enough time to fully train and mentor successors, so they are confident in their ability to handle every aspect of the business. Finally, putting a succession plan in place in advance helps to avoid turmoil should an unforeseen event, such as an accident or illness, require an early transfer of company leadership.
Tips for Crafting a Business Succession Plan
Here are a few tips to keep in mind when crafting a business succession plan. First, be transparent in your plan by explaining who will take over what responsibilities and why you made that decision. Second, clarify ownership values so legal squabbles do not arise after the business is handed off. Third, plan ahead and have the plan in place far before you ever expect to enact it. Fourth, consider the financial and tax ramifications of your succession plan. A financial advisor and business law attorney can advise you on the most practical way to hand off your business interest in the company to the next owner. Fifth and finally, stay connected after you create the succession plan. Mentor and train the next owners in every part of the business and give them time to lead with your guidance before making a final exit, if possible.
Talk to Our Office Today
The business law attorneys at Bennett, Weston, LaJone & Turner can help you craft a business succession plan that will help ensure the future success of your company and provide clear instruction for the next generation of leaders in your family business. Call us to set up a consultation today.