If you want to plan for business succession, then you need to choose someone to take over your business when you retire, die or become disabled. It’s important to plan for succession early on because you never know when you may need someone to take over.
The first, and most important, thing to do is to find a successor. You may want to pass the business onto a family member or transfer ownership to someone outside your family through your estate plan. Sometimes, new management steps into place from your existing pool of employees. If you run a large business, you may need to set up a plan for who takes over which roles when you pass.
Succession isn’t just about planning for who takes over. It’s also about training that person for when that day comes. A detailed training plan is essential. This gives the successor time to learn new skills, to gather information and to practice the role. This gives them a better chance of being prepared to take over seamlessly when you’re no longer able to perform your job duties.
Your succession plan should also consider the realistic possibility that there will be taxes involved in passing on the family business. There may be gift taxes, income taxes, estate taxes or generation-skipping taxes to consider.
Our website has more on succession planning and the steps you may need to take to put a succession plan in place. Remember, planning early is always the best thing to do because you never know when someone you approve of may need to take over the business.