Are you considering stepping away from your business due to another opportunity? Do you want to retire? Maybe you foresee that soon, you won’t be able to continue in your current role due to health or age-related challenges.
You’ve heard the term Succession Plan but what is it and what should you think about when creating one?
A Succession Plan is simply a playbook for how the ownership of a business will change. The change may happen through closing, selling, or transferring the business.
The most important step – and the one that drives all other decisions – is to determine how and to whom the business will be transferred.
If closing, consider:
- What is the timing?
- What costs will be involved?
- Will you sell assets before closing? How? To whom?
- Do you have outstanding issues with vendors, customers, creditors to clean up?
This video on succession planning may help.
Selling or transferring to:
- Family members? Study tax and estate planning issues. Watch out for these succession to family member traps.
- Current employees? Reflect on promotion and leadership roles. If you are promoting, you can pick the right person by instituting Manager for a Day programs.
- A yet unknown entity? Where and how will they be found?
No matter how you will transfer your business:
- Create a timetable for your exit with milestones
- Create contingency plans in case of a change of mind or status
- Plan for your personal future after the transition
Finally, consult business professionals (attorney, accountant, business broker, and/or strategic advisor) throughout the process to guarantee you exit gracefully.