When You Need Help Preparing for a Smooth Business Succession
No doubt you’ve heard the expression about the “best-laid plans.” As the saying goes, there’s a theory that even with proper planning, something can go awry. Fortunately, that’s not generally the problem in preparing for a smooth business succession. In fact, advance planning makes the progression a far easier task.
All things considered, there are a number of reasons that business succession issues can arise. First and foremost, it’s important to understand the concept itself. It is the idea that leadership in a company may be subject to change.
Family businesses are a prime example. In some cases, the move may be a casual one. However, that’s not to say that it might not be detrimental. For example, not every son or daughter may have an interest or the wherewithal to assume a position of authority. Working with an experienced business attorney helps ready a company to prepare for the transition in advance. Consequently, there is a better chance for a smooth business succession.
A Realistic Approach to Business Succession
Although it is certainly not our intent to target family businesses, it makes sense to start with them. We’ve all heard the stories. Daddy invested his life savings and time and effort into building a mini-empire. Meanwhile, his only child was busy traveling the world.
In theory, the father may want to keep his company within the family. However, the son may lack the skills and knowledge to take over when Dad reaches retirement age. Or, worse yet, passes away. How realistic is it for the son to take over the family concern? And, will he even want to?
If keeping it all in the family is truly important, it is imperative that the son learns the business. And, that includes not just the day to day operations. The next company leader needs to be someone who understands forecasts. And, who also has an interest in making the business a profit center.
In some cases, a realistic approach to business succession may mean deciding that sale of the company is the best course of action. An attorney can help you to determine if there is someone to take over your company. In the alternative, business succession may mean preparing the company for sale.
Financial Aspects of the Business
Whether business succession means a change in leadership or sale, it is important that there is some planning concerning the business. Here are some things that should be considered when preparing for business succession:
- What are the future goals of the company?
- Has anyone prepared a business needs analysis?
- Do any current employees have the knowledge or experience to take over?
- Does the business have a mentoring process in place?
- Will it be necessary to recruit from outside the business?
- Are the company’s assets and debts readily determined?
- Is there a strategy in place concerning business succession?
Of course, these items touch upon the basic concerns when preparing for a change in leadership within a company. All businesses are faced with different circumstances that are best reviewed with legal counsel.
If you are in business, you should be concerned about putting a successor plan in place. Contact Manfred Sternberg and Associates to see how we can assist you.