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For many business owners, putting together a succession plan may seem like an overwhelming task. It might even seem unnecessary for relatively young people and have no intention of giving up ownership anytime soon. But if the past year or so has taught us anything, it’s that anything can happen. Owners who’ve built up considerable “sweat equity” in their companies shouldn’t risk liquidation or seeing the business end up in someone else’s hands only because there’s no succession plan in place. Variations on a theme To help you get your arms around the concept of succession planning, you can look at it from three different perspectives:

1. The long view. If you have many years to work with, use this gift of time to identify one or more talented individuals who share your values and have the aptitude for running the company successfully. This is especially important for keeping a family-owned business in the family. As soon as you’ve identified a successor and are ready, you can begin mentoring the incoming leader to run the company competently and preserve your legacy. Meanwhile, you can carefully determine how to fund your retirement best and structure your estate plan.
2. An imminent horizon. Many business owners wake up one day and realize that they’re almost ready to retire or move on to another professional endeavor. However, they’ve spent little or no time putting together a succession plan. In such a case, you may still be able to choose and train a successor. However, you’ll likely also want to explore alternatives such as selling the company to competitors or other buyers. Sometimes even liquidation is the optimal move financially. In any case, the objective here is less about maintaining the company’s strategic direction and more about ensuring you receive an equitable payout for your ownership share. If you’re a co-owner, a buy-sell agreement is highly advisable. It’s also critical to set a firm departure date and work with a qualified team of advisors.
3. A sudden emergency. The COVID-19 pandemic has brought renewed attention to emergency succession planning. True to its name, this approach emphasizes enabling the business to maintain operations immediately after an unforeseen event causes the owner’s death or disability. If your company doesn’t yet have an emergency succession plan, you should probably create one before you move on to a longer-term plan. Name someone who can take on a credible leadership role if you become seriously ill or injured. Formulate a plan for communicating and delegating duties during a crisis. Ensure everyone knows about the emergency succession plan and how it will affect day-to-day operations if executed.

Create the future As with any important task, the more time you give yourself to create a succession plan, the fewer mistakes or oversights you’re likely to make. Our firm can help you create or refine a plan that suits your financial needs, personal wishes, and vision for your company’s future.