Businesses can be a valuable source of income, not only for those who set them up, but for their families, too. Business succession planning can help to increase the chance your business will continue to provide your family with income after you step aside through choice, necessity, or death.
The best time to begin curating a succession plan is long before a transition becomes necessary. In fact, the earlier, the better.
The best time to start? Now
The most effective succession plans are crafted years in advance—not months or weeks. Ideally, you should begin planning as soon as your business becomes stable and profitable or when you hire your first round of key leadership staff. Even in the early growth stages, establishing potential leadership pipelines and identifying your company’s future needs sets the foundation for a seamless transition later.
Key components of a succession plan
Identifying who could take the reins is the first step, whether it’s a family member, internal employee, or external candidate. Future leaders need mentorship and exposure to the company’s critical operations. This often takes years, so an early start is essential.
Your succession plan should cover legal elements such as shareholder agreements and buy-sell arrangements to avoid disputes later. Remember to include a communication strategy that prioritizes transparent and timely communication with:
- Staff
- Stakeholders
- Clients
Effective and proactive communication can help ensure a smoother transition and preserve trust. Don’t forget to include a contingency plan that outlines what happens if a sudden illness or death occurs. A strong plan includes emergency protocols to keep the business running smoothly.
Curating a business succession plan isn’t a one-time task—it’s an ongoing strategy that evolves with your business. Starting early with insightful legal guidance allows you to identify gaps, groom talent and make strategic decisions without the pressure of a looming exit. Failing to do so will mean your overall estate plan is less effective. Contact our office today to consult with an experience succession planning attorney.