If you are deciding to research business succession planning, you are taking the first step to secure your legacy and leaving your business in the right hands. Business succession planning involves a series of logistical and financial decisions concerning how a business owner wants to exit their business. Whether you leave the business by retirement, disability or death, having a succession plan in place is a smart decision.
5 Common Ways to Transfer Ownership
- Redistribution– For a business with multiple owners, you may want to sell your interest back to the company to be redistributed to the remaining leadership team.
- Co-Owner/Partner– One of the most common ways to transfer ownership is by selling your interest to one of your current partners. This decision leaves the company in the hands of someone that understands your values and the way you operate.
- Employee– Sometimes an employee, typically a manager, is the right person to take over.
- Family Member– Pass your ownership interest to a family member.
- Outside Party– Sell your business or ownership shares to a person you highly respect outside of your organization.
Determine the Value of the Business
One of the first steps toward your succession planning should be to determine how much your business is worth. There are several ways to determine the value of a business. Such determinations will vary depending on the industry of the business.
The most important decision is finding the person that you trust with your business.
Find the Right Successor
The most important decision is finding the person that you trust with your business. No one wants to spend their life building a business only to watch someone else run it into the ground. In the right hands, your business can continue to flourish. It’s up to you to find someone that is trustworthy, competent and that truly cares about your business as you do.
Once you choose the successor, don’t forget to train them if needed. You need to show the new owner the ins and outs of your business while taking inventory of the new owner’s assets and skill gaps. Understanding where your successor may not excel is vital information. You can then develop a plan to mitigate those skill gaps to ensure long term success of the business.
Set Up a Succession Plan Now
Maintaining a stable, profitable business is an ongoing battle that can consume the majority of your time and effort. Retirement is sometimes an afterthought and developing plans to turn your business over may not be a priority.
If you are interested in preparing a succession plan for your business, contact The Law Offices of Cipparone and Cipparone.
**This blog is for general informational purposes only. Cipparone & Cipparone, P.A. does not distribute legal advice through this blog. As such, this blog does not constitute legal or other professional advice and no attorney-client relationship is created between the reader and Cipparone & Cipparone, P.A.
Tags: Business Law, business planning, Business Succession, Business Valuation