What is Business Succession Planning?
Business succession planning is similar to drafting a last will and testament, except the plan is for the business rather than an individual. It’s a process that creates an orderly path to transfer ownership in a business should doing so be necessary.
What Businesses Should Consider Succession Planning?
Most businesses should go through the succession planning process. Individuals who make a little extra money from a hobby may not need a backup plan in case something happens to them, but any business that’s more than a gig should have a plan in place to transfer ownership if it’s ever necessary to do so quickly and unexpectedly. Businesses that are larger than a sole proprietorship, especially, should have a succession plan in place because more than one person’s income is dependent upon the business.
When Should Businesses Begin Succession Planning?
It’s never too early to begin succession planning. In fact, the steps to smoothly transfer ownership of a business can (and should be) put in place before a business even opens. This can be included as part of the initial planning phase.
Businesses that don’t have a plan already should begin developing one sooner rather than later. An unexpected illness or death can occur at any time.