By Jamie Batt
Many business owners know they should be thinking about succession but aren’t sure where to start. Assembling a team of trusted advisors is an important step in the succession planning process.
Before bringing together your trusted team of advisors, including your attorney, accountant, financial advisor, and other relevant professionals, take some time to think about what you want your future, and the future of your business, to look like. You don’t need to have every answer before sitting down with your advisors. Their role is to help you work through important decisions and develop a strategy tailored to your unique circumstances, but giving some thought to your goals and priorities beforehand can provide a valuable starting point for those conversations.
Start with Your Goals
Succession planning looks different for every business because every owner has a different vision for the future. Before discussing legal documents or tax considerations, take time to think about what you hope your succession plan will accomplish.
For some owners, the goal is to keep the business in the family and prepare the next generation for leadership. Others may want to transition ownership to key employees who have helped build the company or pursue a sale to an outside buyer. Some owners hope to remain involved after the transition in an advisory or consulting role, while others are ready to step away entirely.
Your personal goals matter just as much as your business goals. Consider how the business fits into your retirement plans, your financial future, and the legacy you hope to leave behind. Understanding your own goals before meeting with your advisors will help guide the discussion, and your advisory team can help you evaluate your options as your plan begins to take shape.
Think Beyond Retirement
Many business owners associate succession planning with retirement, but ownership transitions can happen much sooner than expected. An illness, disability, the death of a business partner, or another unforeseen event can quickly change your plans and leave difficult decisions to others if no strategy is already in place.
Viewing succession planning as part of your broader business strategy, rather than something to address at the end of your career, can help ensure your business is prepared for both expected and unexpected circumstances. Starting early also gives you more flexibility to explore your options and make thoughtful decisions over time rather than reacting when circumstances change. In sum, having a succession plan in place well before you are ready to step away from your business will make the transition more successful.
Take Stock of Your Business
Before meeting with your advisors, it can also be helpful to step back and evaluate the current state of your business.
Ask yourself whether the business could continue to operate effectively without your day-to-day involvement. Consider whether there are individuals within the organization who have the potential to take on greater leadership responsibilities over time. It is also worth reviewing whether your governing documents reflect your current business structure and whether there are existing challenges that could complicate a future transition.
This type of self-assessment doesn’t require you to have all the answers. Instead, it’s an opportunity to reflect on your business today so you can have more meaningful conversations about its future. Your advisors can help identify additional considerations and potential challenges and then recommend strategies that fit your business and your long-term goals.
Be Prepared for an Ongoing Process
Succession planning often involves important conversations about leadership, ownership, family relationships, and the long-term future of your business. Approaching those discussions with an open mind and a willingness to share your priorities and concerns allows your advisors to provide guidance that reflects your goals rather than relying on assumptions.
It’s equally important to recognize that succession planning is not a one-time project. As your business changes and your personal goals evolve, your succession plan should evolve as well. Beginning the process early gives you the flexibility to make thoughtful decisions and revisit your strategy as new opportunities or challenges arise.
Starting the Conversation
Assembling the right team of advisors is one of the most important steps in the succession planning process, but you don’t need to have every detail mapped out before that first meeting. Taking some time to think about where you’d like your business to go and what matters most to you can help your advisors better understand your priorities from the outset. As the conversation develops, they’ll help you evaluate different approaches and build a succession plan that reflects your goals. If you’re ready to begin the conversation, our Business Law attorneys are here to help you assess your options and develop a strategy tailored to your business.