If you own a business, you have likely spent countless hours building, expanding and nurturing it. The last thing on your mind is leaving it. Yet, if you want your business to live on, you should develop an exit plan.
Your succession plan may require as much thought and care as the startup plan did. Whether you plan to retire soon or work until the day you die, there will likely come a time when someone else must take up the mantle. You can make that process smoother by developing a detailed succession strategy. Various factors may affect your plan.
If you plan to transfer ownership or management of the company upon your retirement, set a target date, preferably years into the future. That will give you time to choose a successor and complete a training period. During your final active years you can used a phased approach to gradually transfer responsibility.
If you never plan to retire, your succession plan should include instructions for what happens in the event of your death. Further provisions should address the possibility that you may become incapacitated.
Do you want to keep the business in the family? Would you prefer to transfer responsibilities to current executives or other key employees? Protect the rights of all interested parties by including first-refusal rights or outlining buy-sell agreements. The continued success of the firm depends on making sure the right people are in place.
Even closely held private companies have outside stakeholders. Your business affects employees, vendors, customers and the community. The University of Georgia’s Small Business Development Center points out that a good succession plan can benefit your stakeholders far into the future. The immediate advantage for you is just as important: peace of mind.