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If you own your own small business, it’s important that you take the time to carefully plan the lines of succession after you retire or pass away.
Your succession plan essentially stands on its own, but it can also be built into your estate plan to ensure anyone reviewing your plan understands your wishes regarding how your business will be passed on and continue to operate after you’re no longer involved.
The following are a few tips to ensure you create and execute your business succession plan effectively:
- •Get started early: One of the most common mistakes people make with their succession planning is not giving it the amount of thought and consideration it deserves early on. Start thinking at least a decade or so ahead of time about how you wish to transition your business.
- •Be honest: You should always be completely honest and open about what your wishes are for your succession plan. Otherwise, you risk stringing on people who believe they have a chance at taking over the reins of your business. By being completely open about your plans and wishes, everyone inside your company will know long in advance what to expect after you leave and the steps that need to be taken for a smooth transitional process.
- •Use the expertise of your experienced workers: Your succession plan should consider how you can pass on the expertise your senior employees have gained over their careers. Perhaps they could work alongside their successor for a period of six months, or perhaps you could create training programs that get these senior employees involved as instructors. Their knowledge is an important resource you want to keep in your business even after they have moved on.
- •Do not limit your options: Stay open minded about how your business’s succession could work. Perhaps you don’t limit yourself to one or two individuals from within your family or your company. It might be a good idea to get some insights from an outside consultant about who from within your company appears to be the best fit to move up the ladder. Keeping the business in your family might not necessarily be the best option if you do not have any relatives who are well suited to running a business.
- •Be flexible: If you get started early, you should do so with the understanding that circumstances change—and your succession plan might have to change with them. The general strategies you have implemented for passing control of the business might remain the same, but the details could evolve over the years.
For further tips on how you can better prepare yourself, your business and your employees for an eventual transition to your successor, contact a skilled Ohio business attorney with Seif & McNamee LLC.