When many people embark on business succession planning, they are thinking of the eventual outcome. Who will run the business when they decide to retire or when they pass away? How will the business be transferred to the next generation? What will the succession plan mean for employees, extended family members and others?
These are all important questions to ask, and it is wise to think about how the transfer of power will go. But it’s also important not to assume that business succession planning should only focus on a specific date in the hypothetical future. To increase the chances that the plan will go smoothly, it’s often best to get started well in advance. This gives you a chance to invest in the development of the person you’ve chosen to succeed you in the business.
What type of development is necessary?
Exactly what this development looks like depends on your unique situation, but it’s often wise to bring the successor on early to learn under you. Many business owners do this years before they actually transfer power.
Doing so allows the successor to observe your work and understand what makes the business successful. It gives them a chance to ask questions and learn in areas where they may not feel as confident. It also provides an opportunity to take on smaller leadership roles and develop their skills—all while you are still overseeing the business. They may learn how to manage staff, network with other business owners, balance the books and identify what makes the business thrive.
As you can see, the strongest business succession plans are made well in advance. Be sure you know what legal steps to take while setting up yours.