Many business owners realize that having a plan for what happens with their company is a key component of the estate planning process. They often think it’s critical for much the same reasons they’d want to have an estate plan in place for any other valuable assets.
They assume that it makes it easier to pass their company on to their heirs if they’ve planned for it — which is true. There is so much more to business succession planning than people realize, though. Having a plan in place ensures that you can pass it on to others more seamlessly if you can’t run it yourself. It also builds others’ confidence knowing that it will survive even once you’re no longer at the helm.
What is the most critical aspect of estate planning?
It’s never too early to engage in estate or business succession planning. One of the first steps that you’ll want to take is determining who might want to take on the responsibility of leading your company in the future.
Many business owners may think of their family members as ideal candidates. Many of them might not have the necessary insight or interest to do so, however.
A better choice might be looking to individuals currently working for your company who are showing promise. You may want to call them into your office, ask them about their interest in career growth with your company. This may start with receiving cross-training necessary to take on additional responsibilities.
You may find it necessary to look outside your business if no one stands out in-house. Finding the right candidates and interviewing them can be a lengthy process.
Why is identifying your successor important?
Identifying a successor can increase your customers’ and employees’ confidence simply by knowing that you’re looking out for their future well-being by having a contingency plan. It can also send a message to potential investors that you’re planning for your company’s longevity when you have a next-generation leader in place.
Having a succession plan for your business can also alleviate worries for you and your family. They can rest assured knowing that things will be under control and their financial situation will be accounted for no matter what happens to you.