As a business owner, planning for your strategic exit from the business may be one of the last things on your mind. Many owners of small- to mid-sized companies have spent years and decades building their businesses. With the constant frenzy of activity, succession planning can become a low priority.

However, planning for the transfer of ownership to the next generation should be a critical part of your business. A business succession plan accounts for your strategy to exit the business while ensuring a smooth transition with the next wave of owners. While this becomes increasingly important as business owners approach the traditional retirement age, a recent study reported that nearly 60 percent of business owners failed to have their own succession plan in place.

Considerations to help you get started

It is never too early to start thinking about your succession plan. This plan may be complex and require years of forward thinking. While looming retirement is a motivator for many to begin planning, unexpected events can occur at any age that can disrupt your current business structure.

Here are several tips to get you started:

  • Involve key professionals. Your lawyers, accountants, financial professionals and more can provide sound advice to successfully implement your plan.
  • Consolidate financial documents. Proactively organize key documents for your successor or buyer. This is also helpful in case of an unexpected event.
  • Consider your potential successor. Carefully select your successor and take time to train them, whether you choose a family member, executive or outsider.
  • Communicate your plan in advance. Maintaining some transparency with customers, shareholders and employees can help ensure a smooth transition.

Once you have established your succession plan, it is also important to remember to periodically review it. Circumstances can change and you may need to make key updates. Reviewing this every few years can ensure the plan is as effective as possible.

Planning ahead can work in your favor

Whether you founded your company or worked your way up, planning to eventually part with your business can be challenging. However, by working with the right professionals to develop a thorough, strategic and thoughtful succession plan, you can take comfort in knowing your business is secure no matter what the future holds.

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