Do you need a succession plan for your business?

On Behalf of | Aug 17, 2022 | BUSINESS & COMMERCIAL LAW - Business Formation & Planning

Everyone has different goals in mind when creating a company. Some do so to sell and retire on the proceeds. Others to one day pass it on to their children to run.

Whatever your ultimate goal, it’s wise to remember t things do not always go to plan. So while you might assume you do not need a succession plan because you will soon sell up or do not need one yet because your kids are still young, it’s wise to put one in place now.

Succession plans can save you in case of an accident

Let’s say you are three years away from selling up and retiring. A car hits you, leaving you in a coma for a few months. Eventually, you make a miraculous recovery only to discover that your business is now worth half what it was because you did not have a plan to allow others to run it without you.

Now imagine that you died in that same crash, only your plan wasn’t to sell up but to leave the business for your kids. The eldest is 15, but you figured they would not take over for another twenty years. Hence you had no plan to involve them yet.

As you would stay in charge until then, you never gave others in the company the power to access funds or sign off on legal documents. Your children are still too young, so what now? Will you watch from the grave as your business grinds to a standstill, waiting until a court finds the best way to resolve things?

In both these cases, having a succession plan would have allowed someone to carry on running your business when you could not and preserve its value. You cannot predict the future, but you can plan for it. Consider finding out more about business succession planning before it is too late. Remember, you can alter those plans as time goes on.