Our Hoffman Estates Lawyers Discuss the Importance of Business Succession Planning
Business succession planning is an important part of running a business, especially for small business owners. A business succession plan addresses future “what if” scenarios, such as owner illness, death or retirement. Without a comprehensive succession plan, small businesses run the risk of spiraling into failure when one of these “what if” scenarios comes to pass. Larger companies also need succession plans to ensure smooth ongoing operations during transitional periods involving key leadership roles. An experienced Hoffman Estates attorney can assist you with succession planning and other business and corporate law matters.
Developing a Business Succession Plan
Making plans for future “what if” scenarios involves consideration of both short-term and long-term goals and requires a practical and realistic approach. Succession plans typically address matters such as:
- Transfer of ownership, specifically, who will take over and when the transfer will occur
- Strategies for communicating with employees and stakeholders during the transition
- What training the successor will need
- Identification of company structure and key employees
- List of company assets and liabilities
- Valuation of the business
- Sales agreement and target asking price, if the business will be sold
- Business insurance policies
- Owner wills and trusts
Developing a comprehensive business succession plan can be complicated. A qualified Hoffman Estates lawyer can help you evaluate your business goals and create a succession plan that enables the business to thrive after you are no longer a part of it.
Maintaining a Business Succession Plan
Businesses grow and change over time, and a succession plan should evolve with the business. Corporate leaders and small business owners alike should review their succession plans at least every few years, updating the plan as necessary. When reviewing a succession plan, it is important to reevaluate short-term and long-term goals to ensure the plan reflects current objectives. Updates to the plan might include designating a different successor or adjusting the business valuation. Maybe you originally planned to pass on your small business to a family member who would take over running it, but have since decided it would be best to plan for selling the business instead. Periodically updating a succession plan based on realistic, attainable goals helps pave the way for a smooth transition when a small business owner or corporate leader becomes unable to, or no longer wants to, hold the reins.