Most business owners do not want to consider retirement, but the harsh reality is that at some point there will be a time when you will be unable to or not want to run your company. Instead of waiting until you are incapacitated, you should consider succession planning. You will not be giving up control of your organization if you plan your successor. Rather, you will be protecting your business and estate for your family. The best plan is when you can assess your situation and make plans to have someone competent and capable step up at the right time.
Choosing this person can be difficult. You can look at these factors to determine what course you might want to take:
- Do you have children or a spouse who could be ready to take over? Consider their age, their personality and dreams before assuming that they will be able to step into your company. Be a business owner first and a parent second.
- Who could run the business tomorrow if you were incapacitated? Can your spouse or management team make immediate decisions in your absence?
- What are the long-term plans for your organization? Some businesses are becoming antiquated in today's economy. Maybe your town is aging and your business will not be sustainable for your children.
- What does the cash flow of the business look like? Can your children or successor have the income to buy you out?
An honest assessment is key
If you are hesitant about deciding what will happen to your business when you are no longer around, consider the alternative. What happens to your business if no one steps up when you cannot? You might want to work with an experienced estate planning attorney who understands businesses to develop a plan that fits your needs. A successful transition depends on open and honest communication between all parties involved. Ensure your financial future when you take steps to consider who is going to take over.