Planning for your business’ future is key so that it can continue to grow and thrive even if you aren’t there to watch it do so. It’s also important to know that your business will be left in the hands of someone you trust.
Part of that planning involves creating a succession plan. But what is a succession plan?
How is a succession plan different than a will?
Making a succession plan can help you prepare your company for a change in ownership and management after you pass away.
But, where a will might name your business inheritor, a succession plan details which important roles your employees will step into. You can also include any explanations or requests related to your business.
What does a successor do?
Your succession plan will first and foremost name your successor — the person or people who you want to run your company. This may or may not be the same person who inherits your business. You can choose a family member, a friend or an employee.
Whoever you choose, you should put careful thought into who could fulfill a leadership role and help maintain and grow your business over time.
What should I include in a succession plan?
Make sure that your succession plan is consistent with your other estate planning documents so you can be as clear as possible about your wishes. It should also detail the following:
- Background information on your business
- Target market
- Current value of your company
It’s important to discuss your plans with anyone involved in your plan so the details do not come as a surprise to them.
How can I start?
You should not go through succession planning alone. To avoid misleading language or confusing instructions in your succession plan, consult with an attorney. They can help you figure out what strategy is the best for the success of your business.