What is business succession planning?
Building a successful business will take years of hard work and dedication. Once you have established your business, it is important that you take steps to protect its legacy. An unexpected death of the owner or manager of a business could destroy the company if a succession plan is not in place. With business succession planning, Texas business owners can pass their portion of the business down to a relative, friend, employee, or other capable individual. Proper succession planning will allow a business to survive and thrive with the next generation.
Create a Business Succession Plan
Business succession planning is a multiple step process in which business owners create a plan for their business in the event of their death, disability, or eventual retirement. Without a business succession plan in place at the time of your death, your stake in the company could be passed down to relatives or absorbed by shareholders. You will not have a say in your company’s operation unless you develop a comprehensive business succession plan.
Your business succession plan should:
- Select a successor: Your role as a business owner is a difficult one to fulfill. Selecting a successor to your job is not an easy task. Many business owners will choose a family member so that the business stays within the family, while other business owners look within their employee pool to find the most capable successor. You could consider selling the business to that employee as a part of your succession plan.
- Train your successor: You can start to train your successor while you are alive and running the company to ensure your successor will have the skills and knowledge he or she needs to take over in the future.
- Plan for the transition: Transitioning from one company leader to another can be a difficult process. With your business succession plan, you can implement a transition team to ensure continuity from one stakeholder to the next. You can additionally create a comprehensive set of policies and procedures to govern future business leaders.
Business succession planning is complex and there are numerous variables that any business owner must consider. Consult with an experienced business succession planning attorney for more information about how you can protect your interest in your business across generations.