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Success in business requires having the foresight to plan for the future. That means preparing for the inevitable changes that your business is likely to experience. Business succession planning is intended to help companies adapt to both unlikely and expected contingencies that will come their way. Implementing a carefully designed succession plan can help your small business protect its interests and continue to excel. LaFountain & Wollman P.C.’s business law attorneys are here to serve you.
What is a business succession plan?
A business succession plan is like an estate plan for a small business. Companies must anticipate the common life changes that will impact its ownership and key leadership, such as retirement, death, and leaving the company for a new one. They should also get ready for unexpected events which could affect owners and leaders such as sudden illness and incapacity. If an owner or executive can no longer do their job and there isn’t a plan for what to do next, the business could find itself in financial and legal peril.
The objective of adopting a business succession plan is to minimize the risks posed by these and other problems. A well-drafted plan sets clear procedures and guidelines for what steps the organization should take after certain events occur that could threaten its operation.
How business succession planning can help your small business
Larger corporations have the resources to weather the consequences of just about any storm. Small businesses typically lack this capability. But a comprehensive business succession plan can lessen the impact that major changes might otherwise have on the health of your company. These are a few specific ways:
Keep your business running. In the absence of a plan, your business could grind to a halt if you (or another significant individual) die or leave the company. Smaller businesses typically have fewer individuals who are able to fill the leadership vacuum, which makes a plan that much more critical.
Train the next generation of leaders. With fewer people able to lead the business, it becomes imperative that the company identify and train those individuals who can rise to the occasion. A succession plan establishes principles and guidelines for choosing its next generation of leadership.
Defuse power struggles. A business that doesn’t have a succession plan could be plunged into a power struggle as the remaining owners and leaders figure out who should run the company. A plan that names its future leaders, or creates a process for choosing them, is less likely to encounter this.
Conserve valuable resources. A plan avoids the need for additional time and energy spent dealing with the fallout of lost leadership. This keeps the company focused on turning profits and growth, thereby conserving precious resources.
Protect important traditions. Every company has a story to tell, one that has contributed to its unique brand. Your company’s brand may be built on certain values and ways of doing business. New leaders need to both recognize and preserve these traditions, and a succession plan can help.
Reassure business stakeholders. Investors, loyal customers, and the community at large prefer stability in their favorite businesses. These stakeholders want to know that their trust is well-placed in your company. Adopting a succession plan reassures them that your business is ready to address future challenges.
Let Us Help Your Small Business Plan For the Long Term
LaFountain & Wollman P.C. is dedicated to helping your small business thrive, no matter what the future holds. Let our team review its objectives and needs, then develop a customized business succession plan to protect it. Give us a call today.