What will happen to your business when you decide it’s time to call it quits?
Business owners focus on today, and a few years down the road in terms of their business planning. However, while that’s certainly vital to your profitability and success, it’s also incredibly important to focus on the future. Succession planning ensures that your business will live on after you retire, but it can be a tricky thing and requires you take the right steps. Below, you’ll find a brief guide on what every business owner should know.
Know the Key Steps of Ownership Transfer
Transferring the ownership of your company is much more complicated than simply naming a successor. There are legal manoeuvres that need to be made, regulations that must be followed, forms that must be filled out and filed, and much more. The steps in transferring the ownership of a business include the following:
Planning for YOUR Future
Before you make any other decisions, you need to ensure that your own financial future outside the business is assured. Key-person insurance, investments, a pension – those are things that will help foster independence after you turn over control of your company.
Determining a Successor
Next, you should determine exactly who will take up the reins within your company. This could be anyone, your son or daughter, your sibling, an in-law or someone else. The point is that you need to ensure that the person you intend to succeed you at the helm knows what you’re planning and is in agreement with it.
Training and Prep
Naming a successor is fine, but you must ensure that your business will be in capable hands once you step out of the leadership position. Your successor should have training in the business itself, but should also be educated about the market your company serves. The more education and training you can provide your successor, the more successful he or she will be.
Succession planning for your business isn’t something that should be done alone. You need expert advice and guidance from an outside source, an impartial party who can provide clarity and solid planning to help in this important area.
Will Ownership and Management Coincide?
In the past, business succession often meant that the new owner would also be the manager. Today, that’s not necessarily the case. Ownership and management of a business can transfer at different points, and they do not have to coincide. In addition, it doesn’t necessarily mean that the family member succeeding you as the owner needs to be the manager. That role should be filled by those best able to manage and grow the company.
Impact to Stakeholders
One area of succession planning that needs special focus is how the succession will affect stakeholders in your company. The successor should instil confidence in stakeholders, to encourage their continued involvement, but going about the process the wrong way can instil fear rather than hope, distress rather than assurance.
Succession planning for your business is incredibly important – make sure you have an expert to guide you through the process.
SPECIAL GUEST BLOG by Tony Ritchie, Management Mentor, Mentors.ie
To discuss if your company could benefit from succession planning, please mail us today at email@example.com or call 01 8058053