Understanding the Value of Succession Planning and Why You Need an Outside Perspective
By: Barry E. Haimo, Esq.
August 6, 2020
If you run a business, you know the importance of planning ahead. Every business sees changes, whether it’s from week to week, season to season, or year to year. Planning for the future is how successful businesses remain that way.
However, when you are constantly planning for day-to-day tasks or the next season, it can be easy to lose sight of the bigger picture. That’s why it’s so important to have a succession plan in place. A good succession plan can be the difference between a business that fails and a business that thrives for decades to come.
Why Is Succession Planning Important?
The process of succession planning is intended to keep a business running long after the founder is no longer involved. For family businesses, this is especially important. Not everyone is cut out to run a company; simply leaving your business as an inheritance may not lead to a successful transfer.
A succession plan takes that into account. Good succession plans consider how the business will be run once you, the founder, are no longer involved. They include plans for choosing new CEOs, how the business should be run, and even whether to sell the business.
Succession plans can also include strategies for cross-training employees and passing on leadership roles in advance. The result is a plan that can withstand unexpected events and lead to good decisions no matter what.
How to Develop a Succession Plan
Developing a succession plan involves analyzing your company carefully. You need to know four important things in detail.
- Who in your company or family would be interested in running the business when you are no longer in charge?
- Who in your company or family has the knowledge, skills, and temperament to run a business?
- What knowledge and skills are necessary to run your business, specifically?
- What is your goal for the business after it is no longer in your hands?
Deciding what you want out of your business, choosing potential replacements, and deciding on training can be a long and involved process. For family businesses especially, it can also be emotional. The people who are most attached to the company may not be the best suited to run it, and vice versa. That is the point where an outside perspective becomes helpful.
The Importance of an Outside Perspective
Objectively and rationally evaluating a business you’ve spent your life building can be difficult to impossible. However, this evaluation is absolutely necessary if you want to create a succession plan that can stand up to changing markets and conditions. That’s why getting an outside perspective is necessary for most succession plans.
A qualified business planning lawyer is a great way to get this outside perspective. They can evaluate your business with a clear head and help you design a custom succession plan. Experienced business planning attorneys understand the ins and outs of passing a business to the next generation. If you want to learn more about succession planning, get in touch. We can assist you in creating a succession plan that helps your business help you and your family.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
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