Often, the path to business succession is not smooth. As a recent article notes, the single best way to ensure that succession planning goes as smoothly as possible is to be proactive. Family businesses should have a succession plan in place long before they anticipate needing it.
According to director of the Family Business Alliance, Ellie Frey, “Without a succession plan, there are risks both in management transition and ownership transition . . . You can avert, or at least mitigate, those risks. Also, with a succession plan, you can spell out, if you are the owner or CEO of the company, what you want the business to look like in five to 15 years. It’s a way to preserve a legacy you’ve been working to cultivate.”
As Frey explains, business succession planning cannot, nor should it, happen over night. Frey estimates that it takes five to seven years to implement a successful succession plan. Often, however, business owners are so busy growing their business that they do not make time to create a succession plan. Especially in a rough economy, where it is even more difficult for businesses to succeed, business owners often reject succession planning.
If you have a small business and do not have a succession plan in place, speak with your attorney immediately about creating one.
