When you started your Tennessee business, you likely had hopes for what would happen to it beyond your years at the helm. Maybe you imagined your children taking over and carrying your success well into the future, handing it over to your grandchildren for generations to come. As optimistic as those dreams may be, they are only dreams until you make a plan.
Even if your business is only a few years old, it is not too early to take steps toward the transition of your business to the next leaders. You may be surprised how easily you will be able to step away when the time comes if you are confident in your succession plans and the efforts you have made to prepare your business for the future.
Are you ready?
Many business advisors agree that beginning your succession plan 10 years before you expect to retire is ideal. In fact, some successful entrepreneurs are thinking about the transition of their businesses in the early stages of developing their companies. This is because, as much as you may dream of retiring, there is always the chance that an accident or illness will leave your business without a leader. Without direction for how to move forward, your family may be left without a way to provide for their needs.
Once you begin planning for the succession of your business, here are some points business advisors recommend:
- Having regular family meetings throughout the years to discuss the succession of the business can help you gauge who among your relatives may have the strengths necessary for taking over your responsibilities.
- Decide early how and when the ownership and the management of the company will transfer.
- Carefully preparing your estate plan will help minimize the tax burden your family will carry upon your death.
- The best candidate for a successor to lead your company may not be the obvious choice, so don't rely on the sentimental favorite, such as the oldest child, if someone more capable is willing to step up.
- Make a plan for training your successor, and begin turning over responsibilities a little at a time as years pass.
- Consider changing the structure of your business from a sole proprietorship or partnership to a corporation to allow for a seamless operation when you are no longer its leader.
Of course, there is much more to know about succession planning, and it can be a complex undertaking. This is why it is wise to start early and to obtain solid advice and legal guidance throughout the process.