You have a significant amount of time, money and effort invested in the business you started. Eventually, though, you must either step aside and let someone else take the reins or wrap up your venture. After all, you simply cannot work forever.
A business succession plan outlines what happens to your business before, during and after your departure. Not all succession plans are easy to draft, however. Here are four factors that may affect your business’s succession planning.
1. The nature of your business
When developing a succession plan for your business, the nature of the enterprise may limit your options. For example, if you own a dental practice, you can probably only transfer ownership to another dentist. Accordingly, when starting the planning process, you must fully understand succession limitations and restrictions.
2. The availability of a successor
Starting and growing a small business is often an effective way to achieve the American dream. Not only does your business pay your salary, but it may also be part of the legacy you leave to your children. Nevertheless, if your chosen successor is not immediately available to assume a leadership role, because of age or another reason, you may need an interim succession plan.
3. The financial health of your venture
If you started a business, you likely have significant insight into both your product and your customers. Stepping aside when your company is not financially viable may be disastrous for its long-term success. On the other hand, if your business is thriving, leaving it may be bad for your personal interests. Either way, when you are thinking about succession planning, carefully examining the financial health of the business venture is important.
4. The uncertainty in your goals
Thinking about leaving the business venture you started may fill you with a variety of emotions. One day, you may think you want to work forever, while the next has you dreaming of early retirement. You should not let uncertainty dissuade you from taking the necessary steps to protect both yourself and your business, though.
While there is some flexibility with succession planning, identifying challenges and solidifying your goals are usually effective strategies.