We all struggle with thinking about a time when we aren’t at full capacity, or even around at all. But when it comes to business it is important for the future of your business to make sure you have a documented succession plan and exit strategy.
Even if you have full capacity, you may want to pass the business on to someone in the company, or your children. If you have a business partner, one of you may want to sell your share to the other, or to a third party.
If you have a business partner, and then they suddenly became incapacitated or passed away, what would happen to the running of the business? You may find yourself with a new and unexpected business partner in their spouse or children. If those people aren’t experienced in the business this may cause significant conflict or even damage the business.
So if you have a business you need a well documented Business Succession Plan, and we recommend that you seek professional advice when preparing this. We suggest you speak to both a financial planner, and also a lawyer. If you have business partners then you may want to seek independent advice also.
You do need to think carefully about the ownership and the running of the business. Perhaps you want to gift your spouse and children the ownership of the business, but they may not have the skills needed to run it. In this case you may be better to outline how someone else will run the business (and who).
There is no time like the present, so if you haven’t got a Business Succession Plan then you need to start drafting this…..today!
These things can take some time to prepare and discuss with others, and get advice. So make haste and get the ball rolling today.
Make sure you discuss what is in the succession plan with everyone who is involved so that there are no nasty surprises for partners and family members at a time that is already stressful and emotional. Get their buy in and input. This will also help mitigate any legal disputes or challenges if and when the exit strategy needs to be implemented.
Don’t forget that circumstances change and businesses change. So make it a priority to review your Business Succession Plan regularly and update it as required. While having no Succession Plan can be devastating for a business, so too can one that is outdated or obsolete.
Make sure your accountant is involved in building the plan, but is also aware of what it contains as they will be instrumental in helping it be executed successfully.