If you’re considering a business succession plan, it means that you have another person that you’d like to pass your business onto. This is likely one of your heirs and a direct relative. But there are also cases where a business owner gives the company to an employee or someone else who is involved in the ownership team.
If you are passing it to your children, the first step is simply to talk to them about your plans and whether or not they want the company. If they do, then it may be wise to bring them in and get this process started as soon as you can, even if you don’t think you’ll actually be leaving the company for a few years.
Why is this a good option?
The thing about business succession planning is that it’s more than just turning over ownership. Your heir actually has to know how to run the company. They have to understand everything from the artistic vision and your goals for your company to the technical details and the day-to-day operations. This isn’t something that they’re just going to learn overnight.
If you bring them in early and begin working with them and training them, you can get them ready to run the company before you exit. To a large degree, you could even spend the final year letting them do everything to run the company while you simply shadow them and watch over their shoulder. Some people may find this a bit intrusive, so be transparent about what your goals are, but it can actually be very helpful for them to know that you’re there if there’s an emergency situation. But they still get that hands-on experience running the business so that they’re ready when you decide it’s time to step away.
Additionally, this time running the business in advance gives them a chance to think about what they want for their future and if this is really their goal. Some children are not interested in taking over the company. Your heir may believe that they are and then find out that the practical process of being in charge doesn’t mesh with their personality or holds their career back in other ways. The sooner you can figure this out, the better. It gives you a chance to find someone else to sell the company to and you can adjust your retirement plans.
If you’re ready to begin moving forward with the creation of a business succession plan, take the time to carefully consider all of your legal options.