Most businesses are not meant to be short-term projects. For many owners and founders, their company is part of their legacy, one that should stretch long into the future. A business owner can not be solely focused on the present. They need to think long-term.
This means taking the time to prepare for what’s to come with an official succession plan.
Most business owners don’t have a succession plan
A succession plan is a business’ road map for the future, detailing who will step into which roles should the owner step away from their day-to-day responsibilities. An effective succession plan offers clear direction and guidance for the business, its employees and its future leaders.
Despite the clear benefits, one survey found nearly six in every 10 private small business owners do not have a succession plan in place. These owners gave varying reasons for their lack of a roadmap, but most frequently said:
- They like running the business and don’t want to think about the future
- They are simply too busy to plan
- They believe such a transition is so far off, that it isn’t necessary to have a plan right now
These are all legitimate reasons. None of them, however, account for one important thing: Life does not always go as expected.
Where to start with succession planning
Nobody can predict the future. There are a host of events that might abruptly take a business owner away from their work, whether it be an illness, an unexpected family issue or even a tragic accident. This unexpected change can disrupt the business, leaving colleagues to scramble for answers while tackling difficult legal questions.
Confronting this reality is uncomfortable, even a bit scary. But it underscores the importance of having a business succession plan, or even incorporating it into your estate plan. Where do you start? Inc. offers some potential initial steps. That includes:
- Gathering and organizing all financial documents
- Lining up any needed buy-sell agreements
- Identifying and training possible successors
While it may seem like an inconvenience to take time away from the business’ current needs to think about the big picture, the benefits are significant. A legally sound succession plan can provide clear guidance and peace of mind, ensuring the business can thrive for many years to come – whether you’re there to oversee it or not.