Creating a Succession Plan for Your Business
May 29, 2020
As any Myrtle Beach resident can attest, much work goes into starting a business. No matter the size of the business, an individual can devote much of his or her life into a business. Thus, the focus of a business owner is not only to successfully start a business, but to also ensure that it continues to successfully operate. In order to keep the longevity of a business in mind, a business plan should be devised from the very beginning.
Succession planning can be a very important step to take from the very beginning, as many business owners seek to keep their business going long after they retire or pass. But deciding the right successor is not the easiest decision to make, especially when so many serious and challenging business decisions are being made even before a business is fully operating.
Having a family member as a successor is often considered, as whom can you trust more than your own family? The unfortunate reality is that this is not always the case, as statistics illustrate that only 30% of family-owned businesses survive the second generation. But this does not mean that a family member cannot take over. It just means that it requires specific planning. It was found that 78% of businesses do not have a transition team while 83% do not have a written transition plan.
Having a succession plan does not only help ensure the success of the business by keeping it thriving, but it also helps to cover the owner’s retirement while transferring his or her control to the chosen successor. If you seek to keep a family business in the family, then a succession agreement could look like one that clearly defines the rights and responsibilities of each family member. This could help avoid disagreements and any issues that could arise during this transition.
While it is difficult to think about moving on from a business right when it is starting, the reality is that a succession plan and business plan in general are a beneficial step to take. This process may feel overwhelming, complex and challenging; therefore, seeking legal guidance could be a valuable step to take. Becoming fully aware of your options and rights could aid you as you navigate any business law matter.