There are a multitude of reasons why an otherwise savvy business owner may procrastinate when it comes to implementing a succession plan – particularly if the next-in-line are also next-of-kin. For one, the conversation could jumpstart underlying issues between family members, especially if not all are interested in pursuing the family business. Secondly, it forces the current owners to face the inevitable reality that, at some point, they may be unable to continue at the helm of a company they’ve worked their entire lives to build. However, succession planning is an essential component of running a successful operation – and unreasonable delays could lead to unthinkable disaster.
Too often, business owners treat a succession plan as emergency back-up protocol – laying out what will happen in the event of a sudden death or incapacity. However, succession planning need not be so abrupt, and can take a more transitional approach. For starters, it may take a while for the next generation – be it children or simply new hires – to get acclimated to the company and its structure. In many succession plans, owners lay out a three-, five- or even ten-year transition plan from the current leaders to the up-and-comers.
Notwithstanding the above, succession planning should also definitely include provisions for how the company will continue in the event of a catastrophe, sudden illness, or death in the leadership structure. By planning ahead for life’s inevitable curveballs, business owners can protect against losses that often occur when disorganization occurs on the executive tier, as well as ensure vice presidents and officers are aware of their duties should the need to step in arise.
Lastly, business succession planning is a way to invigorate the next generation as they prepare for their opportunity in leadership. By knowing that the company will eventually pass to them, future leaders will have a vested motivation to learn as much as possible about the world of corporate governance – which is always a sound investment.
If you are considering business succession planning
and would like to discuss your options with a reputable attorney, please contact the Stone Law Offices today: 877-800-3424.