If you own a family business, you are most definitely concerned about how you will pass down what you have dedicated your entire life building to the next generation when you die. And this is where business succession planning comes in.
Much like estate planning, business succession planning is a significant undertaking. It involves making financial, logistical and practical decisions regarding how your business will be managed should you become incapacitated or upon your death.
What is business succession planning?
Basically, this is the process of transitioning the business’ ownership and management. As you can imagine, this is both a daunting and sensitive process. Besides identifying replacements for the business’ management roles, business succession planning also fosters growth in future leaders while protecting the organization’s overall health.
Here are three tips that can help you create a strong succession plan for your family business:
Get a business valuation
It’s important that you are clear about your business’ value as you plan to pass it down to the next management. And this is where business valuation comes in. You need an accredited valuation appraiser for this task. Besides establishing the business’ value, this will also help you spot any weaknesses that require immediate attention.
Be clear about the transition
What role do you want to play during the transition period? Will you retain some decision-making powers? And if so, for how long? Perhaps, you simply want to be a board member after stepping down from active management. It is important that you are clear about your role in the business during the transition period.
Review your business’ policies
It is wise to bring your business’ policies up to date before kick-starting the succession process. This may include updating your policies to match up with any change in the law. It may also include updating job descriptions for the incoming management.
Safeguarding your legacy
There is no one-size-fits-all when it comes to business succession planning. Learning more about Texas business succession laws can help you work out a succession plan that will safeguard your legacy and interests.