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Wednesday, November 13, 2019

What to Include in a Business Succession Plan

The most effective and comprehensive estate plan includes planning for all aspects of our lives that are important to us. It plans for family. It plans for loved ones. It plans for well-being, both health and financial. It also plans for things like business. People invest more than just money in creating and building up a business. Time is spent. Energy is poured into it. A business is a creation that many people rightfully pride themselves on. This is why your estate plan should include a business succession plan.

A business succession plan will help ensure a bright future for your business should you ever leave it. A business succession plan would not only help establish continuity in your business operations should you pass away, it will also do so in the event you ever wish to sell your business or retire. Establishing a business succession plan now will give you time to plan ahead. This way, if there is ever an unexpected event that occurs, a plan will be in place to guide the business on a continued course of success.

What to Include in a Business Succession Plan

Business succession plans will vary in format and terms, but there are certain terms that everyone creating a business succession plan should consider including. For instance, the plan should list successors. This is obviously a critical thing to include and comes with some big decisions to make.

Do you want the business to stay in the family? If so, consider your family dynamics and how selecting certain family members may impact the rest of your family and the culture within your business. Think about whether you want to hire within the business or look outside of the business for a successor. Reflect on the important qualities you wish your possessor to hold and make a list of possible candidates. Think about who would be a good fit and who would want to take on the job.

If the Standard Operating Procedures (SOPs) of your business are not yet formalized, you need to include this in your business succession plan. Writing down how your business functions on a daily business will be important for your successor and with everyone working for the business. It is a document that can be referenced from owners to managers and employees. It can ensure continuity in the function of your business.

People often take how a company runs for granted. The day to day tasks seem like something someone is bound to remember, but it can often get lost in the shuffle. SOPs formalized in your business succession plan can include things like a checklist for how to open the business. It may include how to train new employees. It may also include documents relating to how to conduct a performance review.

The business succession plan should also include a timeframe for the transition period. This is the exit strategy. If you are available to be around for the transition period, how long will you stay on to train your successor? How long until your successor’s replacement takes over (if you selected a successor from within your business)? Personnel changes that will occur after you leave should also be included in your succession plan.

Business Succession Planning Attorney

The above only scratches the surface of what can and should be included in your business succession plan. At Verras Law, we discuss with you the details of your business and the future you want for your business in order to develop a business succession plan that will bring you peace of mind. Contact Verras Law today.


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