It’s not something most people like to think about, but it’s essential to make proper preparations for when you’re no longer around to look after your family and your business.
This includes writing a will, power of attorney, and choosing the right successor who will be able to take your business on into the future.
Here’s a deeper look at each of these in depth, as well as some of our top tips on how to successfully plan your business succession.
Writing a will and power of attorney
If you haven’t done so already, you need to account for what will happen to your business if you were to die in a will. No doubt you have an impressive list of assets in your possession, and you should view the business like you view your personal assets.
Without a will, your business or shares could be passed onto someone who has no interest in running it or someone who lacks the skills to run it properly. You might even plunge your business and legacy into disarray if multiple people come into conflict about how the business should be run.
If you’re not too concerned about the business once you’re gone, there’s still a good reason to get a will together. After all, the business could quickly lose value and get sold off at a bad price – leaving your loved ones without as much as you might have liked.
You should also take out a business lasting power of attorney, which allows a business owner to appoint a person or people to make decisions in the organisation’s best interest should they become mentally incapacitated or otherwise unavailable.
Planning your succession needs to cover all eventualities, including a timely retirement, unforeseen death or incapacitating accidents.
We’ve worked with excellent will writers and attorneys who would be delighted to work with you. Just reach out to us for our recommendation.
Making a succession plan
When it comes to your actual succession plan, you should always make sure you start as soon as possible – preferably after you’ve finished reading this blog.
Not only is that because anything could happen to you at any time, but because a good succession will have been meticulously planned over the years.
They come with a wealth of difficult conversations, questions and decisions that need to be taken on with great consideration, including succession structures, conflict resolution mechanisms, board membership and management plans.
Early planning also means you can decide how you’re going to approach management and ownership succession, which are not the same things and don’t have to happen at the same time.
For instance, you could stagger each succession, giving your prospective successor a director’s role a year or so before you relinquish total ownership of the business.
Engaging the next generation
Planning early also means that you can get your preferred family members involved with the business early on. That way, they should be more interested in actually taking up the mantle of your business.
If your successor doesn’t want to sign up for the succession plan, don’t force it onto them. A reluctant business owner will not be a successful one, and they might even come back anyway, equipped with a wealth of experience from their previous jobs.
Furthermore, if you’re unsure whether your successor is actually up to the task of running your business, starting your plan early means you can lay out what you expect of them before you hand over the keys.
Talk to us about your business succession plan and how we can help you build the most efficient succession plan possible.