A Brief Guide to Business Succession Plans

Due to the nature and structure of many small businesses, a properly crafted succession plan is vital for a small business’s continued success. Succession planning is more important for an average small business than it is for an average corporation. So, why do more than half of all businesses not have a formal succession plan in place?

One major reason is the same reason many people never get around to crafting a plan for their personal estate, which is that people don’t like to dwell on their own mortality. Small business owners take immense pride in their work and can sometimes struggle to imagine their future without having a hand in their company’s day-to-day operations. Another reason could be that choosing a successor means hurting some feelings among people they’ve known for years and care about deeply – often family members. 

Putting off succession planning, no matter the reason for doing so, can cause your loved ones and other beneficiaries to miss out on sharing in your success. As the old saying goes – Failing to Plan is Planning to Fail.  Do you want your company and its employees to live up to the core values you worked tirelessly to instill? Do you want your personal and business legacy to be a smooth transition for those you care about, or to be a fractured mess that grieving loved ones will have to try and piece together? Most everyone desires the former, but oftentimes don’t know where to start to make it happen.  While the logistics of each business’s succession plan will be unique, every plan will have similar phases and all of them have one thing in common – a beginning.  

Who Do You Want to Lead the Company?

After you retire, who do you have in mind for keeping up the company? Family members are usually an attractive option, but employees who have been crucial in the day-to-day operations of your company are often the strongest choice. Of course, you may always sell your company to the right buyer, which can sometimes be an outside party that has experience running similar-type companies. The key is to honestly think through who will be the best person to continue the company’s success for the benefit of all the stakeholders.

Speaking with Potential Successors

This is more than just a routine job interview. Even if you are already very familiar with a potential successor, you need to ask the right questions to ensure they share your vision and goals for the company. 

Training your Successor

After you choose your successor or successors, take plenty of time to pass the baton. Transitions between founders of a small business and their successors often take years. During this time, you should gradually give him or her more responsibility until you feel comfortable transferring power. If you sell the Company, invest time and energy into making sure the buyer has everything they need to be successful.

Conclusion

If you are still an indispensable part of your small business’s day-to-day viability, retirement and handing over the reigns to your successor can seem eons away. Succession plans take years to execute, and tomorrow is unfortunately not guaranteed. What do you want your business’s legacy to be? If you’re wanting guidance on how to achieve your succession plan or what you want it to look like, please consider reaching out to Soterian soon so we can help you arrive at a solution.

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Soterian

At Soterian, our goal is to help business owners like you think bigger. Bigger than today, bigger than your business, bigger than yourself.

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