16th Dec 2014
You’ve spent years of your life building a business from the ground up, or perhaps you’ve managed a business that was handed down to you, and now it’s time to prepare for transferring the business to a younger generation. There are several considerations to make even for small companies, but larger companies require even further consideration. It’s important to plan for business succession piece by piece so that you can ensure your legacy continues after you move on to other things. But what considerations should you make? We will discuss these matters further. Let’s start with developing business strategies for the future of your company.
Business Strategy Planning
The first step in preparing for the future of your business after you hand it down is ensuring the company is set in a direction that will ensure future financial success while maintaining the original goals and business ethics of the company you built. Consider such things as the long term goals, what you envision for the future, and how the company will evolve and adapt to the changing economic client. These are all things that are important for you to consider before leaving your company in someone else’s hands.
Selecting Responsible Leaders
The next step is selecting responsible leaders to carry your business into the future. After having managed your business for as long as you have, depending on the size of the company, you may already have several suitable candidates in mind for taking your company in the direction you feel it deserves to head into. Consider your business strategy, and how the leader or leaders you are considering will lead your business either towards, or against that goal. If you do not see this individual as capable of leading your company into a future that matches the ideals of its previous leader, yourself, then they are clearly not a suitable candidate. Take time during this process, as one of the many struggles that former business owners struggle with after their business is left to others is watching their company fall apart as the new successor takes the company in an unintended direction. If you took the time to build a company to greatness, take a reasonable amount of time to ensure the company continues its journey in greatness under new, capable leadership.
Training and Education
Planning for business succession should begin long before the process is ever set to actually happen. There are several reasons for this, and one of the major reasons is planning for the proper training and education of your successors. This isn’t just important for whoever will actually run the company, but also the staff that will work under leadership to ensure the company continually heads in a positive direction while maintaining financial success as well as staying committed to the values that made the company what it was in the first place.
The first step is ensuring your training and education will accurately prepare your management and team for the future of the company. Training should prepare them not just for what things will be like in the present without your leadership, but also the future, and any potential obstacles that may be encountered down the line.
While the actual transfer of the business to your successor will take place when you retire, whatever the reason, it’s important to ensure that the transition is as smooth as possible. Research seems to indicate that transitions are smoothest when they are done in a timely manner, they are final and do not require the former owner’s participation in daily activities, the former owner is publicly committed to an orderly succession plan, and when the owner has articulated and supervised the development of company principles regarding the new management’s accountability, mission, policies, goals, and strategy.
As mentioned previously, it’s important to take the time to plan the transition of your business in advance so that the transition occurs as smoothly as possible. It’s recommended to gradually transfer more and more responsibilities to your successor so that they may take charge of the company in steps to ensure they aren’t overwhelmed with responsibilities. One recommendation is to take a number of planned absences periodically before actually relinquishing control. Seeing how your business performs during short breaks away from the company is a real insight into how your company will actually run when you are no longer around and will help test the leadership you’ve implemented.
One of the hardest parts of moving on from a business that may have once defined you is letting go. Often times, what makes business succession fall apart is the former owner’s inability to let go. While it is truly often not personal, sometimes the new leaders may consider this hesitation as lack of confidence in the new management. The reality, however, is that letting go of something you built is never an easy process if the business meant anything to the owner. This is why the owner should take all the necessary steps to ensure not only financial and managerial preparation for the succession of the business, but also steps for the emotional separation from it as well.
Choose a Good Attorney
Planning business succession is difficult to go at alone. It’s important to choose a professional, reliable attorney in order to plan for the smooth succession of your business with as little speed bumps along the way as possible. Not only can a business succession planning attorney ensure that you have taken all the necessary steps in planning for the succession of your business, but can also assist you in preparing the necessary documentation, making a process that may seem impossible on your own all the more manageable.
Attorney Dwight Tompkins is here to assist you with planning your business succession. There is much more to discuss then just what has been described in this article, but call today so that you can begin discussing your business succession goals today. You can reach the office at 714 385 0044.
Don’t take on business succession alone. Contact Attorney Dwight Tompkins today!