When you are busy running your own business, you always have a lot of tasks to take care of. While you often look toward the future, to ensure your business can succeed in the long run, one task you may overlook is creating a succession plan for your business.
Even if you are a decade away from retiring, creating a business succession plan is a good idea. Here are some reasons why:
- You never know what can happen. You could become incapacitated in a serious car accident or be diagnosed with early onset Alzheimer’s or dementia.
- You could establish if any of your family members wants to take over the business in the future.
- You could ensure your life insurance is enough to fund passing down the business to a family member.
- You could identify if a key employee wants to take over your business and establish a way for them to purchase it from you.
- You can ensure you have a plan to secure important data and operating procedures for your business, so your business infrastructure isn’t impacted negatively if you no longer can operate the business.
Some of the essential items you should include in your business succession plan include the following:
- A comprehensive guide to your business’ day-to-day operations.
- An assessment of any non-essential operations and processes.
- An analysis of which employees and positions would be most impacted by you leaving or you being unable to run the business.
- An analysis of the facilities your business operates in and how the business would operate if it had to move or consolidate its locations.
- A detailed list of your business’ intellectual property protections and data security practices.
- An employee handbook.
Once you develop your business succession plan with the help of an attorney, you will need to revisit it every few years. You may need to update it if your chief financial officer retires or you identify a new potential successor. You may want to update your business operating procedures that have changed.
You don’t want your business to suffer if you can no longer operate it. Having a business succession plan in place will give a blueprint for how your business can operate in your absence with minimal disruptions.