Part of developing a successful business plan is having a roadmap for the future. Ensuring your business's success also means thinking about success in the future. Therefore, you should consider putting together a business succession plan.
Business succession planning is the process with which you detail what would happen if you were to no longer oversee your company. Many people don't much think about business succession planning for a number of reasons, but it's a great idea to have a plan in place for several purposes. Let's look at why you might want to consider a business succession plan.
Life Can Come at You Fast
Life is unpredictable. This is as true in the world of business as it is anywhere else. One of the most important reasons to have a business succession plan in place is in case of emergency. This could involve a disability or a death. When there is no business succession plan in place and something unforeseen happens, transitions tend to be chaotic and unsuccessful. Think of your business succession planning as insurance. You buy insurance to protect your company, so you ought to have a plan that protects your company as well. None of us want to think about the worst, but it's best to be prepared for it.
Because You'll Keep Giving Yourself Every Excuse Not to Plan
This reason might be a no-brainer, but if you are planning for the future, then you must look toward the future. Business succession planning often gets pushed aside because it takes time; when running a business, time is something you tend to have in very short supply. But business succession planning can be every bit as important as coming up with a successful business plan, and once you make time for it, you will realize that you should keep making time for it.
It Can Save You Money
Business succession planning can save you money in the long run or if there is an unforeseen event. Sudden changes in leadership are generally not good for a business. Not only does it lead to a chaotic environment, but it can also lead to a chaotic checkbook. When you have a plan in place, you also most likely have a successor in place. But if you don't, it can cost a lot of money to hire someone who would be qualified to run a business. Not only that, that outside hire wouldn't be as familiar with everyday operations, which means productivity could lag.
Communicate and Innovate
When you start putting together your business succession plan, you're going to need to get all your top employees together to figure out how the succession is going to work. By going over every detail of day-to-day operations, you might stumble upon solutions to problems you've had in the past — or just think of better ways to accomplish things.
Motivate Your Workers
If your staff sees you planning for the future, it could signal that there are opportunities for upward mobility. It may motivate them to work harder, too. It also helps workers know that there is a plan in case of any unforeseen events. Plans put people at ease, and people at ease are generally better workers.
Sometimes, transitions get messy because there are disputes over who should take over the business when it becomes available. This can be especially true with family-run and owned businesses. But with solid family business succession planning, you shouldn't have to worry about that. By explicitly appointing someone as your successor, you and your family won't have to worry about any unnecessary drama if there is an unforeseen change in leadership.
Business succession planning isn't easy. You are going to want to have a team of people helping you along the way. At Krogh & Decker, LLP, we have business succession attorneys to help you through the process of business succession planning.
If you are thinking about putting together a business succession plan or have any questions about the process, please contact Krogh & Decker, LLP, Business Attorneys at (916) 498-9000 or online.