Business transition Business succession: Do you have a plan?

It’s a simple fact. You won’t be running your company forever.

However, business successions are complex undertakings that require years of preparation to maximize the probability of success. Ideally, transitioning your business is something you should begin planning for a decade before you leave—not when you’re 6-12 months from retiring.

Not only do you owe it to your family to ensure they’ll receive the equity you’ve worked so hard to build over the years, but you also owe it to your employees to provide a viable financial future.

If you know where you want to end up, it will be far easier to devise a business succession plan to get there. When do you want to retire, and what type of retirement do you envision? Would you prefer to gradually pull away or make a clean break? What actions can you start implementing to minimize the impact of your future departure on your organization?

The following questions are designed to help you begin thinking about some of the more pressing issues surrounding the future of your business without you at the helm:

1. Have you made an effort to decentralize key decision-making, or do you still call most of the shots? What steps could you take to be more collaborative with future leaders of your firm?
2. How much are you “the heart and soul” of your business in the minds of clients and vendors? How deeply would their confidence be shaken if you were suddenly gone? What can you do to begin lessening that impact?
3. Do you have an accurate estimate of your business’s value? As part of your succession plan, how much of that value are you willing to give up, and when?
4. Have you identified either an internal or external successor, and is that individual (or individuals) aware of your plan and timetable?
5. If you have partners, is there a formal buy-sell agreement in place? Is it funded, and does it cover a variety of potential events (death, disability, retirement)?
6. If you plan to sell internally, how will the purchase be funded—and over what time period?
7. What plans can you put in place to help hold on to key employees who won’t be owners of the firm?
8. Will the terms of your succession plan provide enough income and liquidity when you retire?

> Listen to our I’ve Been Meaning To Do That podcast to hear the real-life success story of Marietta Lee, a third-generation family business leader.

By starting to think about these questions now—while you still have plenty of time to change course—you just might make a world of difference in the sustainability of your business for generations to come. Crafting a successful plan takes time and effort—working with an advisor who understands how your business and personal concerns intersect can be a tremendous help to you and your family.