Understandably, most business owners are focused on the day-to-day operations of their business and taking steps to grow revenues.
Thinking about retirement or handing over the business isn’t something that’s even thought about, let alone planned for. However, a business succession plan is extremely beneficial and a necessity for small businesses with owners at or near retirement.
While some owners can and will sell their business, many don’t have that option and prefer to have the business continue even after they have stepped down.
Here is a list of some of the most important reasons to create a business succession plan:
- A succession plan ensures that there will be an orderly transfer from the owners or founders of the business to the next generation.
- Preparing one in advance of retirement or handing over the business will save a substantial amount of time and money down the road by allowing you to put in an entire process to follow for who will lead the company in the future, how to get them ready and what goals they need to be focused on.
- It allows owners or founders to exit the business at maximum profitability while simultaneously laying the groundwork for the continued success of the business.
- It will force you to address and answer some very important questions that are often overlooked by small business owners, such as:
- who will be the successors;
- how much is the business worth;
- what sort of management strategy needs to be in place to ensure a smooth transition;
- how will your departure impact key business relationships with customers and suppliers and
- how much income will you need when you step away from the business.
Having a business succession plan in place is incredibly important to protect you and your business in the future.