While over 90 percent of American businesses are family-owned, less than 30 percent of those businesses are handed down to the second generation. The lack of a business succession plan is the key reason cited for being unable to transition the business to the next generation of leadership. If you want your thriving Missouri business to remain a hallmark of your legacy, you might consider contacting a Springfield business lawyer to initiate your business succession plan.
A business succession plan should be an integral component of your overarching estate plan and should aim to structure the passing of your assets in a manner that minimizes tax obligations and maintains significant control of your family business and its holdings. Most experts advise that your business succession plan be developed at least 10 to 15 years before you plan to retire or relinquish primary control of the business’s day-to-day operations.
Below, we review five steps to successfully develop a business succession plan.
Define Your Priorities
Consider what’s most important to you for the future of your business and convene a meeting with your family or any otherwise interested parties on how they fit into that vision. Determine whether there are people on board with your plans and make sure they are committed to seeing your business plan through. Gauging everyone’s interest and expectations is key.
Pick a Successor
Deciding who you will select to lead your company – whether a family member or a current employee – is critical to your business succession plan. You will want to get your successor involved early in the process so they can help you strategize about ways to move the company into the future.
Mentor Your Successor
Along with ensuring that your successor gets involved early on in the succession planning, make sure that you are mentoring your successor so your business will continue to operate successfully in your absence. This is especially important if you plan on retaining a financial interest in your business. Do be sure to additionally introduce your successor to key suppliers or providers so they can begin getting to know them.
Document Your Succession Plan
This may go without saying but work with your Springfield business lawyer to put your plans to paper. Every detail of the transition should be documented and recorded so that there’s easy to follow guidelines for those tasked with putting your plan into place.
Review Your Plan Frequently With Your Springfield Business Lawyer
Your business succession plan should be a living, breathing document that’s constantly revisited and revised to meet your wishes. Rarely is a business’s transition that simple or straightforward, and plans change constantly. If you’re ready to get started on one of your own, get in touch with a seasoned Springfield business lawyer.