Don’t wait to create your succession plan

What will the new year be like for your family business? What about in five or even 10 years? Will you still be at the helm guiding your company? More importantly, do you want to be? If not you, then who?

If you haven’t created a succession plan, you’re in good company. Although 77 percent of business owners have a will, only 33 percent have a succession plan, according to a 2008 PNC Bank survey.

When an owner of a successful small business departs, it can leave a void of uncertainty among employees and stakeholders. Oftentimes he or she is the reason the company has enjoyed success – and a company’s future depends on continued strong leadership.

While it’s no fun to think about the impact your retirement, disability or death will have on your small business, it’s important to sift through the “what ifs” so that you can create a succession plan that benefits all involved.

When beginning the planning process, get the thoughts and opinions of family members and business partners on their future involvement with the company. This will give you a better idea of who really wants to take on the challenges of the company and who might prefer a different path from the family business while perhaps maintaining an equity stake. Also, circle back around and make sure all interested parties understand the succession plan after it is finalized.

Keep in mind that a succession plan isn’t just about naming an heir; it’s also about navigating tax laws and minimizing the financial burden on family members. The financial aspect of a succession plan can be complex. An attorney and/or financial planner can walk you through the process, make sure you’ve tied up loose ends and help you ease the potential financial strain on family and the business.

A succession plan is also about management and making sure the company can run smoothly in your absence. Is staff trained to carry on without you (this includes the high-level strategic plan as well as the day-to-day basics of making the business work)?

Do you have an aging workforce nearing retirement themselves? Consider creating basic succession management plans for key staff to ensure continuity in service and productivity should someone else depart. And consider how involved – if at all – you want to be when the torch is passed.

Customer loyalty for a small business often rests on the owner. Customers might head off to the competition if they think that the company can’t carry on without you. Consider how you can make the transition seamless for customers and not lose the trust they’ve built in your company should you leave. Encourage relationships between customers and other staff so they know the business is more than just you.

Lastly, revisit and revise the succession plan every few years. Make sure it continues to reflect the current status of the business as well as your family situation.

Pam King is president/CEO of the Better Business Bureau serving Northern Colorado and Wyoming. She can be reached at pking@wynco.bbb.org.

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