Developing a successful business is not easy – it takes years of hard work and dedication. However, in developing their business, many business owners neglect a key aspect of planning – their exit strategy. Some may think it is too difficult to develop, that they won’t need a plan for a few more years, or that their children will just be able to take over the business. When the unexpected occurs, whether it be an unexpected death or sudden disability, the future success of your business depends on the succession plan you have in place.
When developing a succession plan, it is important to first determine your goals for the future of the business. Some factors to think about are:
- Do you ultimately wish to sell the business?
- Would you like the business to stay in the family?
- Are any of your family members currently active in the business? Are any of your family members interested and capable of taking over the business?
- If the business is not going to continue in your family, who will take over when you are gone?
Your answers to these questions will dictate the type of succession plan you need in place.
If it is your wish for the business to continue, you need to identify who will succeed you. This could be a family member, current employee, or someone else whom you trust, depending on your goals for the future of the business.
Once this person is identified, you should develop a plan for training this person. It is important to ensure that if you were suddenly unable to run the business, whether due to death or disability, there is someone qualified and knowledgeable that can take over with a minimal amount of interruption.
While a succession plan may seem unnecessary or too time consuming to develop now, it is important to have one in place before the need arises. Failing to have a succession plan in place can be detrimental, or even fatal, to the future success of your business. Contact one of our business attorneys, Tom Carpenter, Bob Thomson, Craig Shannon or Heather Timmins, for assistance with your business succession plan.