If you have a family business, something that you may want to do is to prepare to pass it on. You may already have an idea of who you want to have take over your company when you retire or pass away, so now is a good time to start succession planning to avoid litigation in the future.
Succession planning is a unique process, because it’s not simply a legal form that transfers ownership of a business. It may also mean taking time to train a new business owner and to help them understand the regular daily workings of the business. Over time, you may want to:
- Transfer the day-to-day operations of the business to the successor
- Allow the successor to handle the business’s finances
- Encourage the successor to make business decisions
Sometimes, you may have more than one successor in mind. If that’s the case, it’s a good idea to work with both or all of them at the same time so you can see how they work together. If there are conflicts, now is the time to resolve them before the company is in their hands.
If something happens to you unexpectedly, having a succession plan in place can make sure your business continues to function as expected. If you get hurt or pass away without a succession plan in place, the business could struggle, lose value or even end up closing its doors.
Finding your business’s successor is just the first step of the planning process, but it’s among the most important. Your attorney can help you draw up a contract if you think it’s time to name a successor.