You’ve worked hard to build your business—picked the right employees, implemented structure, and kept it running smoothly for so many years. Your business has likely become a big part of your identity, and considering its future ownership feels like a daunting task, along with both logistical and emotional considerations.
Whether you’re keeping your business in the family, selling the business, or planning your own exit strategy as you hand it over to other employees, the goal remains the same: ensuring the success of your business, no matter what the next move might be. And if you’re figuring out how to pass it down to the next generation, getting family business succession planning advice early can make the transition smoother.
Why Succession Planning Matters
Business succession planning goes beyond just eventual retirement planning; it protects your business’s value and legacy in the event of disability, a sudden departure, or any unexpected life changes. Setting a plan in place helps prevent internal conflicts, ensures the right people step into leadership roles, and minimizes potential disruptions in the company’s structure and operations.
Steps for Securing Your Business’s Future
Identify Roles Needed: Think beyond deciding who will be the next CEO, look at all the internal roles that support the leadership and consistency of the company. While a CEO might make the big-picture decisions and steer the ship, they need the right crew to keep the ship sailing smoothly. This might include finance, operations, HR, or sales roles.
Assess Current Team Members: As a business owner, you can quickly identify who has the eagerness to grow. Open the opportunity for team members to step up–those who will put in the hard work and take initiative even when no one asks. Also, consider whether you will need to hire someone externally or if a family member will want to take over. Getting them on board early and having them learn the business under your guidance will set the company up for long-term success.
Develop and Mentor Leadership Skills: Creating a strong leadership pipeline begins with implementing growth and development opportunities for your team. Cross-train and provide growth and development opportunities for anyone who expresses interest. Employees are more invested and committed to the business when the business invests in them. Keep communication open by offering both positive feedback and areas for improvement.
Putting a Succession Plan in Place
Now that you have a clear understanding of who will step into each role, it’s time to build your business exit strategy and take action.
Establishing a Formal Succession Plan: Document who will take over each position, along with their specific roles and responsibilities. Lay out any expectations along with timelines to give you a clear idea of what needs to take place for the transition. Outline the steps necessary to shift leadership so you can step away with ease and peace of mind.
Review and Update Your Plan: Just as you review and update with estate planning, business succession planning follows the same rules. If there are any changes to the business’s structure, workflow, or team members, your plan should be updated accordingly. Let your plan evolve with your company, so you can be ready if anything major were to happen.
Financial Implications of an Exit Strategy: Plan for any buying or selling agreements, including who can purchase the business, the minimum sale price, and the funding arrangement. Integrate your exit strategy to align with your retirement planning, your estate planning, and long-term financial goals. Be mindful of tax implications and how they affect the sale or transfer of your business. That way, you’ll know you are financially covered when you step away from the business.
Contact Caress Law
Just as you don’t approach running a business alone, you shouldn’t tackle your business succession planning alone either. The attorneys at Caress Law can help secure the success of your business and your financial well-being. Our team can help you develop a plan with a solid legal foundation from family business succession planning, to estate planning advice. Give us a call at (503) 292-8990 or fill out the form below to get started today.
