Whether you are the sole owner of your business, have business partners or are one part of a large organization, you undoubtedly contribute a great deal to the venture. You may even be invaluable to the product or service your enterprise offers. Either way, effective succession planning may ensure your business continues to thrive when you are no longer there.
Business succession planning involves making financial, legal and logistical decisions about the future ownership of your company. Not only does creating a comprehensive succession plan put your mind at ease, but it may also boost the confidence your customers have in your organization.
What are some common succession strategies?
When planning to hand over control of your venture to someone else, you likely have some options. Business leaders typically take one of the following five routes:
- Handing the business down to an heir
- Selling the business to a co-owner
- Selling the business to an employee
- Selling the business to a third party
- Selling an ownership interest back to the company
Each of these options has its advantages and drawbacks, while some strategies are probably not feasible for your business model.
What goes into a business succession plan?
According to reporting from Inc. Magazine, it is rarely too early to start succession planning. With a good succession plan, you have a roadmap for transferring ownership of the business without interrupting processes.
Most good succession plans include the following components:
- A timeline for the succession
- A designation of your successor or successors
- Standard operating procedures for the venture
- A valuation of the business
- An explanation of succession funding
Writing an effective succession plan is not something you should take lightly or rush. Ultimately, the time and effort you put into planning your exit are likely to help you cement your legacy as a savvy business leader.