As you age or your health declines, you might find yourself worried about what will happen to your business when the time comes when you’re no longer willing or able to run it. After all, running a business is no easy feat, and its intricacies can swallow an unprepared individual whole, resulting in business failure. As scary as that may sound, there are steps that you can take to protect your business in the long-term to better ensure not just its financial viability, but also your own financial wellbeing and the stability of those you care about.
The basics of succession planning
One of the best things that you can do in this regard is create a succession plan that spells out how ownership of the business will transfer. This plan should be detailed and thought of as a step-by-step guide so that there is no confusion or misinterpretation as to your intent. To achieve that goal, your succession plan should include each of the following:
- A timeline for the succession, including specific dates, if possible
- A list of those who are best suited to succeed you in listed order of priority and also specifying the reasons behind their ranking
- All documentation that culminates in your standard operating procedures, such as employee handbooks, written policies, and training materials
- A recent valuation of your business that gives a clear indication of the business’s worth and the method used to reach that figure
- A specification as to how the succession will be funded, especially if it involves selling the business to another individual
Create the business succession plan that is right for you
Remember, there are a lot of ways that you can handle business succession, which is why it’s important that you’re as thorough and as detailed as possible. Lack of clarity can lead to legal squabbles that are costly for you and your business. Therefore, if you’d like assistance in developing the business succession plan that is best for you and your business, then you may want to think about sitting down with an experienced business law attorney to discuss the matter further.