Is long-term prosperity part of your business plan today? Business succession planning is not just for the future; it’s for the present, too. The earlier a business owner plans for the company’s future, the more prepared everyone involved will be, which can lead to business success for generations.
Here are 10 best practices to ensure your business carries on as you intend while benefiting you now.
1. PLAN AHEAD. Putting a plan in place now sets the business on the proper course to groom talent, make changes to best prepare for the next generation of leadership and increase the business’s value.
2. HIRE YOUR TEAM. Team members should include a CPA, wealth advisor, exit planning advisor and financially savvy legal counsel.
3. SET GOALS. Knowing what you hope to achieve with your business in the long run is the first step toward achieving your goals toward successful business succession.
4. TRANSFER CONTROL TO KEY EMPLOYEES. The first step in a succession plan is to identify the ideal successor and to begin training, sharing decision-making and slowly transferring control to this person or persons.
5. IMPROVE ON STRENGTHS. Evaluate your current employees’ skills and ability to assume larger roles. If deficiencies exist, address and rectify them with job development and training programs. Be strategic when hiring additional staff to ensure your business is staffed properly and ready to go when it’s time to make changes.
6. BECOME A PROFESSIONAL BUSINESS. If you have a sole proprietorship or partnership and want to have one or more successors continue the business, you’ll need to form a corporation, which can continue to operate after the business is sold or upon death of the owner.
7. COMMUNICATE YOUR SUCCESSION PLAN. It’s important to inform key employees and family members of the plans you have for the future of your business and how they may fit into those plans sooner than later.
8. DISCUSS FAMILY MEMBERS’ GOALS. Is there a family member who actually wants to take over the business someday? Does he or she have the necessary business skills? Are no family members capable and is a co-owner or key employee the more viable successor? These are critical questions to ask when planning for your business’s future.
9. BE FLEXIBLE. Research by Robert Half Management Resources shows that only 8 percent of executives surveyed said there was someone within their company who could easily replace them. New hires who are capable of eventually filling advanced roles or who want to build a career with your company and cross-training current employees are good places to start.
10. MONITOR AND REVISIT YOUR PLAN REGULARLY. Meet with your would-be successor often to talk about your shared vision of where the company is going and to reaffirm that he or she is still interested in taking over someday. Check in with your succession team to ensure nothing has changed or needs to be revisited or revised.
Following these 10 best practices will help to ensure that the business you have put your heart and soul into will continue to thrive not only now but in the hands of the next generation.