Starting your company is exciting and you may not think of the moment you’ll leave your business. But, if retirement is in your future, you may need to start thinking about creating a succession plan. A business succession plan helps companies outline a strategy to smoothly transition a company from a current CEO or managing partner to another entity.
You might not have considered a succession plan before, but they are essential for a few different reasons.
What Does A Succession Plan Entail?
All businesses have complex moving parts and a succession plan can help ensure that the company runs smoothly while ownership or leadership is transferred. When your business is transferred, a number of concerns can pop up, but a secure succession plan can prevent potential problems, from tax issues to leadership concerns. An efficient succession plan should include some to all and more of the following:
- Updated chain of command
- Buy-sell agreements
- Retention planning
- Tax payment plans
- Review of insurance policies
- New leadership designations
- Process to transfer entities
- List of assets and inventory
- Responsibility assignments
- Schedule of implementation
- Announcements and notices
Succession plans help pass leadership with minimal disruption to the business, so your company can continue operating efficiently and effectively, though each plan varies based on the type, circumstances and complexities of the business. The exact process is different from company to company, including the details of the succession plan.
Creating a thorough succession plan is essential to your company, even if you’re just starting out. Planning an exit from your company can be just as important as planning the beginning of it.