How to Plan Succession for a Business

Posted by Anonymous , 9/4/2007 Tags:PlanSuccessionBusiness
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How to Plan Succession for a Business

Introduction

Retirement, illness and death are inevitable. All businesses must have a plan to continue operating when its founder, owner or president steps down. Think about a succession plan plenty of time in advance. A good time to start is between 55 and 65 years old. Planning also means that lawyers and government won't be deciding the succession for you.

Instructions

Difficulty: Challenging

Look at the Future

Things You'll Need

  • Advisers
  • Attorney
  • Business plan

Steps

1

Step One

Communicate to colleagues how the business must continue to flourish when you leave. You might be nearing retirement or have health issues that keep you from the day to day business details.
2

Step Two

Develop key roles of responsibility for certain members of the company early. Know which people have good business sense and managerial skills, as well as their strengths and weaknesses. This allows time to discern where the leadership talent is located.
3

Step Three

Take care of the legal aspects of your plan. Gather close advisers and an attorney to place your plan in writing.
4

Step Four

Write a business plan with your successor. Include your vision of the company's future, new products and expansion ideas. Interact with his or her plan on running the business.
5

Step Five

Think through a time line implementing the transfer. Set dates for a smooth transition of operations.

How to Transfer

Steps

1

Step One

Consider "Gifting." Transfer the business over time to heirs.
2

Step Two

Establish a trust. Either a testamentary trust that is in your will or living trust activated while you are alive.
3

Step Three

Look at management buy-outs. The business continues and you either sell the company to management or set up agreements for compensation in stock and options.
4

Step Four

Plan to sell the company to an outsider.
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