When you are running your own business, you rarely run out of tasks that need to be completed. Whether it’s hiring employees, innovating or introducing new products, addressing client needs or balancing your budget, you always have a lot on your plate.
One thing that many business owners overlook though is creating a business succession plan. In fact, according to one 2017 survey, nearly 60% of business owners don’t have a business success plan. A business succession plan dictates who will take over your business should you pass away suddenly or if you decide to sell the business quickly. With a business succession plan, your business will continue to operate smoothly in your absence.
What should be included in a succession plan
Some of the key items that should be addressed in a business succession plan include the following:
- Who your successor will be
- The timeline for business succession
- The value of your business
- Formalized standard operating procedures for the business (an organization flowchart, employee job descriptions, an operations manual and a company employee handbook and policies)
- How a successor can purchase the business
When to update a succession plan
You should update your succession plan about every three to five years, especially as you near retirement. If you think a family member or dedicated employee might want to take over the business someday, you should keep them in the loop as to where your business succession plan is on file and how they can buy out your share of the business when you want to sell yours. You also want these successors to be well trained to take over all aspects of the business so the transition to their ownership is more seamless.
An experienced business law attorney can help you write your business succession plan. Once you complete your succession plan, you will feel more at peace knowing that your business is more likely to prosper in your absence.