Tips for Business Succession: Preparing Your Business For a Successful Handoff
FIRST: Have a Plan
Do you plan on selling your business at some point in the future? Do you plan on passing your business interests onto your children? In either case, have you started training your likely candidate to take over your business? Have you communicated your thoughts to that person? Have a plan in place as a starting point. You can always evaluate and modify your plan. The first step is to make a plan and put it in writing!
Do you have an emergency plan? What would happen if you could not show up to work tomorrow? While it is not wise to make early promises, it is essential to begin communicating with potential successors early on to gauge their interest. This may help direct your business decision making in the years leading up to your planned business succession. Many times people are forced into retirement or selling a business before their ideal transition date.
SECOND: Communicate Early On and Regularly
Many family businesses struggle with communication. It is hard enough communicating with employees but when family members work with one another the family dynamics can make communication even more difficult. Make sure you have a standard procedure and practice for communication in your business. Regular meetings that include the business owners and your likely successors or high-level managers can give everyone a chance to inform one another of business ideas and share information that can create buy-in: like sales data. Some businesses have had great success including non-management employees in regular meetings and providing incentives for employees to identify and propose solutions to improve the business. If you have yet to identify successors for your business, growing and developing your employees is essential to help locate potential candidates.
THIRD: If your the only one who can do what you do, you have a problem:
For the longevity of your business it is important that you train others to do your work. This can include developing standard written procedures and/or providing opportunities for others to assist you or shadow you in your work. If you haven't been on a vacation and several years because only you can keep the ship afloat, consider it your work to train others and have your systems in place and go on that vacation.
FOURTH: Don't be afraid to retire
Retirement offers opportunities to begin new projects. It can be the beginning of something new rather than an absolute end. You don't have to completely step out of your business either. Consider what parts of the business you truly love. Are you a farmer that loves working the fields? Chances are you would be happy to have someone take over the business functions of your job and that others would welcome you to help with some of the fieldwork in between your time catching up on your overdue vacations. Are you a jam making expert like Beth Linskey? Beth’s passion is making jam. After selling her business, Beth has been able to continue to make jam and promote and sell the jam of her former business at the Fulton Stall Market in New York City.
For more tips, plan to attend Harris-Pero Legal Counsel, PLLC’s presentation at the NOFA New York conference in Saratoga Springs in January 2018. NYSSFPA Board Members, Attorney Megan Harris-Pero and former owner of Beth's Farm Kitchen, Ms. Beth Linskey, will present and discuss business and legal planning issues.
Megan Harris-Pero, Principal Attorney*
Harris-Pero Legal Counsel, PLLC
Small Business - Estate Planning - Elder Law
*NY and PA Licensed
**ATTORNEY ADVERTISING- This post is provided for general advice and entertainment only. Please speak with an attorney about the specifics for your situation and your state.**