I represent dozens of small and family businesses and one of the things that I see family businesses overlook is a succession plan. That is how can the company prepare for the future and live beyond the current generation. What happens when someone retires? What if there’s an unexpected departure, disability or even a passing? Having a succession plan in place before any of these things happen will ensure your business can continue operating as you intend. Plus, it can free you now to focus on your main goals for today: running the business.
There are five things every family business owner should know about succession plans:
- Think about the company’s vision for the future and you need to make it a reality; the succession plan starts at the top;
- Hire talent and groom them to be able to do your job. This means investing in your employees, help them become an expert in their job. This will in turn become an asset to you when you want to retire, take time off, or the unthinkable situations.
- Pass down the knowledge and wisdom of your business. If only one person knows the secret formula, or some other cornerstone of the company, and that person is no longer around or if that person is ill, or otherwise unavailable, it makes it incredibly difficult to recover from a tragic situation.
- Be prepared to look outside your family or organization and hire in to the company.
- Review employees regularly so that they know where they stand and whether they are part of the company’s vision for the future.
Once you and your attorney develop a plan put it in writing through a buy sell agreement, estate plan, or other legal document that outlines the wishes of the executive team.
While there are aspects of a succession plan that need to be put in writing, a solid succession plan is not a “set it and forget it” document, but one that is continually revisited and nurtured. If you would like to discuss your family business’ succession plan needs, and how we can help, please contact me.
Learn more in our video about family business succession plans.
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