If you want to make sure your business is sustainable for the future, you need to have a succession plan. A succession plan outlines who will take over your business when you retire, become incapacitated, or pass away. Creating these plans can reduce any issues when it comes to transitioning leadership in a company. Here are a few steps to take to create a successful plan for your small business. 

small business owner
Practice Areas Free Consultation

Timeline of Succession

If you want to create a solid succession plan, you must set a clear transition timeline. You can select the date for when you plan to retire or want to turn over operations to another owner. These timelines should be done well in advance. Most planning professionals suggest that you have a process in place at least five to since years before the succession.

Choose Your Successor

Next, you will want to identify who will take over the business. This successor can be:

  • A family member
  • A business partner
  • A trusted employee
  • An outside buyer

Whoever you choose, you want someone capable and willing to take on the responsibility. Once you’ve identified a potential successor, this is the time to give them the proper training and mentorship to prepare them for their future role.

Set Up Your Standard Operating Procedures (SOPs)

With any plan, you need to document your business processes and procedures. You will want to cover everything from day-to-day operations to long-term strategies. When you have these procedures in place, you can help your future successor to understand all the operations for your company. 

Value Your Business

Your business needs to be appropriately valued as part of your succession planning. This assessment can help you determine the value of future owners’ shares and obtain the necessary insurance for protection planning. Since business valuation is complicated, you should contact an experienced professional to complete this step. 

Communicate 

You will always want to discuss your plan with your employees, customers, and family members. Being transparent about your plan can help prevent misunderstandings. Plus, you can make sure that everyone is on the same page. However, be careful of the timing. You never want to cause unnecessary worry or disruption within your business. 

Make a Contingency Plan

Finally, your succession plan should cover unexpected events like death or illness. Consider setting up a power of attorney, creating a living will, or purchasing life insurance. With a contingency plan in place, you can make sure your business continues even in the face of adversity.

Do You Need an Attorney to Help with These Plans?

When it comes to these complicated issues, you may need to enlist the help of a skilled attorney. Many plans handle matters regarding finances and taxes. Whenever you create your plan, you want to make sure it adheres to all the laws in the state. 

Also, your plan should be reviewed every year or after any major changes to the company’s structure. With that, your small business can be ready for the future. 

Get Assistance for Your Small Business Succession Plan

If you want to create a succession plan for your small business, you need to consider all your options. By taking this time, you can help secure the future success of your company. If you would like to learn more, reach out to the estate planning attorneys at Bielski Chapman, LTD. To schedule a free 15-minute consultation, please contact our office at (312) 583-9430.