Succession planning can be a logical, systematic process if you approach it like any other part of your business planning. However, it can also have an emotional component, especially when it comes to passing on a family business, estate planning, and grooming future leaders. Family interpersonal conflicts can sometimes make the process difficult.
It's important to set aside emotional conflicts and recognize that certain jobs within your company, including your own, are simply too important to be filled by people who don't have the right knowledge, training, or preparation. If you plan to pass down your business to a family member, it's never too early to start preparing him or her to take the helm, and to communicate openly to gauge his or her interest in and aptitude for taking on your business.
It can also be hard to make succession planning a priority when you're busy managing the day-to-day needs of your business. When your company is growing or has reached its stride, and you're focused on hiring and retaining employees, cash management, customer service, marketing, inventory, balance sheets, sales, and other priorities, it's easy to put off succession planning until another day.
But, you never know when an unexpected event will cause a turnover in leadership. Such events can throw your business into turmoil or even shut it down if you're unprepared. View succession planning just as you do any other part of your business planning and preparation, and avoid putting it off. Done right, succession planning can be a key way for you to bring forth talent, nurture leadership potential, develop managers, and retain your top talent.
Key Steps to Successful Succession Planning
Read on to identify the key steps and challenges involved with succession planning. You'll get answers to the following questions:
- What are the components of a good succession plan?
- What is a buy-sell agreement?
- How do I make succession planning part of planning my estate?
- Can I sell my business to a family member?
- Can I give parts of my business to family members as gifts?
- What are my different options for succession planning?
First Commonwealth Bank and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.