As a small business owner, you must ensure that you have a suitable business succession plan set. This is a critical yet often overlooked aspect of long-term business continuity. Without a well-structured framework for the transition, losing you may lead to significant negative impacts on the business.
Crafting an effective succession plan also helps to ensure your loved ones aren’t left trying to make complex decisions about the business while they’re dealing with the emotions of your death. Understanding these facts about a succession plan for your small business may make it easier to establish the plan.
Set the management transition standards
The company will need a suitable leader if you aren’t there to run it as you have been. Ideally, you’ll have someone who you’ve been teaching the ins and outs of running the company. Having the individual named and the transition standards and any other applicable information written out in the plan will make it much easier for the company to remain operational.
Determine if a buy-sell agreement is necessary
A buy-sell agreement is indispensable if the business will have to be sold if something happens to you. This will include permissible transferees, funding mechanisms and valuation methodologies. With a solid buy-sell agreement in place, stakeholder disputes are minimized.
A succession plan isn’t a static document. Instead, it’s one that must be reassessed periodically to ensure that the terms are still suitable. Each point that’s mentioned in the plan must align with the business’ evolving objectives and your current wishes.