What Should Small Business Owners Know About Succession Planning?

 Posted on May 12,2020 in DuPage County Business Law Attorney

Succession planning refers to passing on ownership or leadership roles in a business. If you are a small business owner, proper succession planning can help you avoid many of the negative consequences of a sudden change in ownership or management. Even if you do not plan to give up ownership in the immediate future, it is never too soon to get started on a business succession plan. Once you are ready to move on to a new business venture or retire, the plans for selling or passing on the business will already be started. Ideally, succession planning should be an ongoing process that is updated as your business changes and grows.

Hire Employees Capable of Taking on Leadership Roles

Sometimes, a business owner wants to keep a business in the family. He or she may have an adult child or other relative that he or she hopes will eventually take over the business. However, passing the business to a family member is not always be the best option. It is also possible that the intended recipient of the business decides that he or she does not want to be a business owner. This is why it is crucial that business owners hire employees who are capable of filling leadership roles as they become available.

Choosing an employee as your successor is not the right choice for everyone, but it does come with certain benefits. If your successor is an employee, you will have time to properly train him or her and set the business up for success—even if this success occurs in your absence. Furthermore, if employees know that there are opportunities for advancement and even the chance of being an owner, they will be more inclined to put in the maximum effort at their current jobs.

Be Proactive Instead of Reactive

It is an upsetting possibility to consider, but have you ever considered what would happen to your business if you become seriously ill or passed away? There are some situations in which succession planning is obviously necessary, such as when an owner or manager is planning to retire, but sometimes an unexpected event forces the need for a change in leadership. Proper succession planning will give you the peace of mind that even if something happens to yourself or a valuable member of your team, your business will not be left without a leader.

Contact a Wheaton Business Succession Attorney

Succession planning is not only about choosing a successor but also developing a business that will be able to run smoothly even when major changes take place. For dependable legal guidance regarding succession planning and other business needs, contact a knowledgeable DuPage County business lawyer from Stock, Carlson & Asso. LLC. Call our office at 630-665-2500 and schedule a confidential consultation.

Sources:

https://www.investopedia.com/terms/s/succession-planning.asp

https://www.sagepeople.com/about-us/news-hub/succession-planning-strategy-effective/