Is your business succession plan ready for when you retire?

| May 27, 2022 | Business Law

When you are an owner, executive or manager at a business, your retirement is more than a transition in your own life. It will also be a major transition for the business. A significant number of small to medium-sized businesses do not survive the transition to new management when an existing executive or owner leaves the company.

Creating a succession plan now can help you ensure that your business will continue to thrive even after you end your professional career. When you take the time to create a thorough succession plan, you help the business move an appropriate successor into your role.

What do you include in a succession plan?

The details of your succession plan and what you specifically include will depend on the structure of the business, your role in it and how you hope to influence the successor who replaces you. Typically, succession plans include detailed instructions about your job responsibilities and possibly also personal information that you do not provide to others in writing elsewhere.

From account information to a client list, there will be a lot of information about business operations that no one but you knows. Including that your succession plan helps ensure that the person who takes over your role has all the information they need to do their job well.

Beyond details of your contributions to the company, you will need to include information about the successor who will take over your role. If you have spent years training and grooming someone in middle management, you may name a specific person or a shortlist of qualified internal candidates. Other times, you may provide guidance about the quality, professional experience and education that would make a candidate for your position a good choice. 

Succession plans only help if they are ready when the company needs them

Like with your personal estate plan, you could find countless reasons to delay the creation of a succession plan for your business. Those excuses could eventually do far more harm than good if a medical emergency or personal situation forces you into unexpected early retirement without a plan already in place.

Investing the time and careful thought into the creation of a succession plan now will help protect your business from disruptions in management that could force it to close its doors.