Succession planning is the process of deciding who will take over and operate a business when the owner and other key leaders pass away. Often, business owners just assume that a family member will take over when the time comes. However, it’s better to have a formal plan in place for a variety of reasons.
Succession Planning: Ensures the Business Carries On
Many business owners just don’t realize that a business expires with the death of the owner if there’s no formal succession plan in place. With a business succession plan in place, the business can live on and grow. Whether it’s a small business, medium-sized business or large corporation, a business succession plan allows your business to live, grow and evolve after the death of the owner. With business succession, even some Fortune 500 companies have been in operation for generations.
Succession planning is a part of estate planning. It helps eliminate confusion and family disputes over who will carry on the legacy of the business. Its plan appoints a new owner and outlines specific details, such as assets and business bank accounts. All around, it creates a smooth transaction between the owner and successor.
Another benefit of succession planning is peace of mind. Since you have carefully selected your successor ahead of time, you have plenty of time to train this individual to take over daily operations of the business.
Succession Planning: Gives the Big Picture
A good succession plan goes further than just focusing on replacing high-level executives. It allows you to incorporate all layers of employees, especially the ones who to the daily work to keep the business going. Neglecting these folks could have adverse consequences. Continued benefits like health insurance can be considered. Succession planning breeds a culture of strength in departmental relationships. And by including your human resources department in succession planning, elements like hiring internal candidates and the employee-evaluation process can be outlined. All around, a comprehensive succession plan can encourage employees to maintain company loyalty. It’s a business strategy that embraces the future and is essential for company survival.
No matter how secure you think your future is, succession planning is an essential part of doing business. Let attorney Leticia Martinez begin your succession planning for your business. She’s experienced in the preparation of succession planning and is detail oriented.