Getting Ready for Transition in Your Succession Plan
The ongoing success of your business is a major goal in one's succession plan. To have this success and for the succession plan to work well you must prepare carefully for the transition.
Identify weaknesses in your business and your successors and create a plan to fix them. You may find there are family issues that need to be addressed so they don't impact your business. Your business valuation may show vulnerabilities in your balance sheet. Start addressing these issues and others so they don't negatively impact your succession plan.
Make your business's worth as high as possible. Set goals with your team between now and your planned retirement date. Plan how you will meet these goals and set metrics to measure your progress.
Keep your corporate books up to date. Fine-tune and document your business's systems and processes. This will provide for a smoother transition and make for happier employees and customers.
Make sure your successor will be well prepared to take over. Develop a clear career path for your successor to develop the skills and experience they will need. Develop the path with your planned retirement date in mind. Work closely with them to be sure they are growing into the role.
Develop a plan to keep your key employees in the business. You may want to offer bonuses or other incentives to retain these employees.
Start handing over some responsibilities. For your business to survive it will have to be able to exist without you. Give your successor ever increasing responsibilities. This will help to ensure that they will be able to take over. It will also give you time to focus on other things.
Determine the relationship you want with your business in the future. Once the business is no longer yours, do you want to stay involved? If so, what do you want your role to be? Define that role and the appropriate compensation.
Ensure you have the right legal and financial instruments. Work with your lawyer to determine if you have the right legal structure for your business and develop needed legal agreements. It may be advisable to buy life or disability insurance. Work with your advisors to make sure you have what's necessary for your business and succession plan.
Preparing for your transition is essential for your business and its succession. Both your business and its successor need to be ready. There are many steps to this end, and it is never too early to start planning. It will be better for your business and retirement. Consult with Shoffner & Associates, counselors to small business, to strategize on your transition and succession plan. Remember, your succession plan is an evolving tool. Review it regularly.
Starting a NEW business or know someone that could use our help? Call your friendly neighborhood attorney today.
With the right help, you are more likely to succeed. The attorneys at Shoffner & Associates will be happy to help you.
Freya Allen Shoffner, Esq.
Shoffner & Associates
Counselors to Small Business and Families.