Austin TX Business Law Blog

Friday, May 15, 2015

Business Succession Planning

Will Your Company Have a Future Without You?

If you are running your own business you are probably very focused on the here and now, making sure your business is running well and avoiding (or getting through) the many obstacles it faces. But you should also think about the future, because the future will happen whether you are prepared for it or not.

One thing to consider is succession planning which outlines the transfer of leadership in the event that you leave your company by choice (perhaps to start another business or retire) or suffer serious injury or death.  

A recent Inc. magazine article states that a Deloitte survey found:

• Nearly 90% percent of business leaders realize their company’s success depends on proper leadership succession, 

• 13% are confident with their succession plans, and 

• 54% stated lack of talent has damaged their companies.

To help plan for succession:

• Define what type of leader your company needs. What type of skills and behaviors are needed to run it? What specific actions will a new CEO need to take and what knowledge and experience will be needed to succeed? 

• Identify job specific assignments linked to business strategy which can help to prepare this person, in addition to useful feedback to make sure the person is on the right track. 

• Define how leadership talent will be promoted and identify high potential employees formally as those with potential. Give worthy candidates training, incentives and added authority.

• Track the development of needed skills. Measure candidates' problem solving and decision making skills, a candidate's emotional intelligence and his or her ability to negotiate and navigate problems with employees, customers and outside partners. 

If you are not the sole owner, succession planning should include buy sell agreements between those with ownership interests. If one party wants to sell his or her share, to whom can that interest be sold and for what price? A mechanism needs to be worked out so if a part owner is leaving the company, he or she (or his or her family) will be treated fairly.

If you own a business and want help preparing for its future, call business law attorney Sanjeev Kumar at (512) 960-3808 to schedule a consultation today.

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