Importance Of Succession Planning

Entrepreneurs need plenty of self-belief in order to make it in their chosen industry. Unfortunately, entrepreneurs are often guilty of focusing on building their business around themselves and forgetting to consider what happens to the business after they are gone?

If you spent a lot of time creating a successful business, you should definitely spent enough time on planning for its future after you no longer work, whether due to retirement or something more unthinkable. Succession planning as vital for entrepreneurs as it is for big businesses.

This guide will help you understand what succession planning is all about, why it is important and what options are available for entrepreneurs. It’ll also help you focus on the key aspects of

It makes sure the business operations can continue as normally as possible, while the ownership of the business changes hand.

Most often succession plans deal either with leaving the business to family members or selling the company to someone else.

Why should entrepreneurs have a succession plan?

When entrepreneurs start planning for their business, the questions of what happens to your business after you stop working are naturally not the first thing on one’s mind. But succession planning is as essential for ensuring business success as having a proper plan for running the business. Life can be unpredictable and planning for different outcomes is essential for business success.

The numbers of businesses that don’t have a succession plan in place is quite high. A recent US Trust Insights on Wealth and Worth Survey found that nearly66% of business owners don’t have a succession plan. Most often, businesses think a written plan is not needed and the consequences of having a succession plan in place are not properly understood.

But the benefits of having a proper succession plan are enormous. A proper succession plan

It is important to assess all the available options and consider which are the best routes for your business.

Below is assessments of the most common options business owners take: handing over the business, selling the business, or liquidating the business voluntarily.

Handing over the business to a successor

When it comes to handing over the business to a successor, you have two main options: either keeping the business in the family or finding a non-family successor either within the company or outside of it.

Keeping it in the family

Family businesses used to pass on from one generation to another, but succession to the next generations is now much less common. In the US, for instance, the Family Business Institute reported in 2013 that only 30% of family-run businesses succeed into the next generation, and less than 13% are handed over to the third generation. Part of this is down to lack of proper succession planning.

If you are running a business, you need to carefully think whether you’d like a family member to continue your work, as well as whether they are even willing to do so. You don’t want to force anyone to run the business, but you should also not assume your family members wouldn’t be