Creating a Business Succession Plan
Feb. 28, 2023
Most people are aware they should have a will in place to provide for their family and loved ones and ensure the contents of their estate are distributed according to their wishes. However, a surprising number of business owners haven’t taken the same steps for creating a business succession plan. In fact, according to a 2020 study by the Association for Talent Development, only 35% of companies had a business succession plan in place. For help with this, reach out to me at The Law Office of Gregory L. Williams to discuss your options for business succession. From my offices in Columbus, Ohio, I can represent clients throughout Central Ohio.
What Is a Business Succession Plan?
Passing control of the business you own is one of the most important things you can plan for. To do this, you must start creating a business succession plan which is a legally-binding document that outlines your plan for transferring ownership from yourself to someone new. Each plan will be unique and should be custom-tailored to your individual needs. Because of this, it can be extremely helpful to work with an estate planning attorney experienced in helping businesses. Your plan should include a timeline for the transition, the name(s) of your successors or potential successors, a detailed account of your standard operating procedures, an accurate valuation of your company, and what funding sources will be used during the transition.
Why Is a Business Succession Plan Important?
A formalized plan ensures your business will continue to operate smoothly and without interruption should ownership need to change. This could be that you simply want to step away from your business to pursue something else, but it can also take effect should you become incapacitated or pass away unexpectedly. This will not only help your customer base but your suppliers, employees, investors, business partners, and family. A well-written plan can save everyone time, money, and legal hassles during the transition.
What Are the Steps for Creating a Succession Plan?
The first step when starting to write a plan is to contact an attorney who can guide you through this process and ensure you have a comprehensive and enforceable plan. You’ll then need to take a critical look at your existing business model and clearly identify major roles and responsibilities associated with them. Then, you can consider who would make the best successor for these. You may be able to draw from employees or partners currently working with you, or you may need to look outside of your business and begin recruiting potential talent. Once you’ve established your successors, you’ll work to create a thorough action plan that covers every step of the transition.
What Common Obstacles Should Be Mitigated?
Undoubtedly, you’ll encounter some common obstacles when creating a business succession plan, such as deciding who should step up into the leadership roles. You’ll want to choose people you trust to carry out the vision of your company, but who can also take on unexpected challenges and be respected by other employees. If you choose a successor based solely on your preferences and not on who will work best with your remaining team, your business will suffer because of it. You also need to clearly communicate your plan to everyone it will affect. Holding back details or failing to address key components will also negatively affect the transition and morale of your company.
Plan for Your Next Steps
If you have your own company but are still questioning whether you need a business succession plan, give me a call to better understand your options and learn why you should take this important step today. At The Law Office of Gregory L. Williams in Columbus, Ohio, you’ll work with a team who’s passionate about helping you and your business to prepare for the future, whatever that may be.