Importance of a Business Succession Plan
As an entrepreneur, you have relied upon your own vision and hard work to form a company and guide it through the early stages of development. Similar to your children, that business is something you raised from an infant and helped guide through those unsteady first steps into the world of business. However, many business owners fail to consider the long-term future of the business.
Contemplating your company without you around to guide it can be as challenging as sitting down to craft your own personal will. In both cases, you are faced with the reality of your own mortality. For your business, a succession plan is vital to providing stability in the long term. Below, you can learn more about how important a business succession plan is to your company.
Coverage for Emergencies
While you'd undoubtedly love to live a long, healthy life, you cannot foresee the potential for emergencies. Anything from a severe car accident or diagnosis of a life threatening illness, to sudden death, can leave the future of your business hanging in the balance. If you died tomorrow, who would guide your company? Who would take over with the legal authority and professional acumen to direct the business?
A business succession plan protects the business you've created by providing a clear path for a successor to take over and continue directing the company toward success whether you are suddenly incapacitated or simply decide to retire early.
Much like the creation of a will in your personal life sends the signal that you understand your own mortality, a business succession plan shows humility and the ability to understand you cannot guide the business forever. It also shows that you have faith in the long-term ability of your company to succeed, and as such, that you want the business to carry on without worrying about succession issues.
Protects Your Business
A succession plan provides a number of protections for the business itself, as well as your colleagues and employees. When developing a succession plan, you offer colleagues in your business to express their opinion, needs, and concerns for a future in which you no longer lead the company.
Additionally, a succession plan establishes a clear path to sustain income and support expenses, both for yourself and for the business. Your employees aren't going to work for free or tolerate their benefits being frozen while succession issues work themselves out. By solving those issues ahead of time in a succession plan, the transition from your leadership to that of a successor is smoother.
Clear Leadership Matters
Speaking of the transition to a successor, a business succession plan establishes the path your successor can follow in taking full control of the company. Change at the top can be a source of stress for your employees, especially if they believe their livelihoods are at stake. A business succession plan avoids this stressor by ensuring your employees that the company's future is solid, and that your successor will continue to follow the business plan the company has used for years.
In most cases, the establishment of a business succession plan allows you to select a successor who shares a vision for the company that matches (or is similar to) yours. This not only provides you with a sense of calm about handing over control of the business someday, but also provides continuity for your employees. They can rest assured knowing that day-to-day business won't change and the company won't be crippled by infighting for control.
Simply put, a business succession plan makes it easy for you to step away from the company when the time is right, while also providing a pathway in the case of emergency.