You’ve invested so much in building your business – time, money, effort and talent. Whatever type of transition you’re considering – whether it’s retirement, selling to a third party or handing the business down to a family member – succession planning is an important piece of the puzzle that can set your business up for success – or failure – in the future.
The first step is looking at your business and – based on your objectives – determining that you need to start succession planning. There’s a lot of elements to think about – your personal goals, the status of the business and how children or other family members will come into play, to name a few.
These considerations will shape your succession plan, and they’re different for every single business owner. Ideally, you should give yourself three to five years to develop your plan for a smoother transition and – possibly – significant financial savings.
Assembling a team of advisors to help navigate your succession planning is critical. Consider including (at the very least) an attorney, an accountant and a wealth advisor to help you navigate the complex legal, financial and tax aspects of transitioning your business to ensure that you’re maximizing your savings and minimizing your risk. Your advisors can also help you establish a plan that allows for the seamless transitions of ownership and management of your business.
Maybe you’re thinking that retirement is a long way off, or you aren’t ready to think about selling your business yet. If that’s the case, you still need some kind of plan in place in the event of something unforeseen (death, disability or divorce, for example).
Planning now will make sure that you, your family and your business are properly protected. Start today and make sure there’s a process in place to avoid conflict with family members or business partners in the future.
The biggest mistake in succession planning is starting too late or not at all. Proper planning can allow you to consider all of your options and maintain a successful business even after you hand over the reins to the next generation of leadership.
About The Guest Author: Bryan Havighurst is Vice President and Wealth Planning Team Lead for Fifth Third Private Bank. He provides comprehensive financial advice for small business owners listening, understanding and sharing customers’ curiosity.
Handing Over Key To Success Photo via Shutterstock