Creating a Business Succession Plan
Aug. 16, 2022
Small businesses and large corporations alike can benefit from creating a business succession plan to avoid uncertainties, conflicts, and tumultuous transitions. A comprehensive and well-crafted business succession plan can help your business prepare for inevitable changes and sudden events such as the death or incapacity of leadership.
If you are considering developing a business succession plan, you need to understand what the process of creating a plan entails and what obstacles to expect to ensure a smooth transition. At Law Offices of Kelton M. Burgess, LLC, our business and estate planning attorney helps businesses of all sizes navigate the process of succession planning in Pittsburgh, Pennsylvania, and surrounding areas. We are committed to helping clients create business succession plans tailored to meet their specific goals and needs.
What Is a Business Succession Plan?
A business succession plan is a binding document that helps you prepare your business for the future. Business succession planning allows business owners to spell out what will happen to the company when they retire or die. A plan can also identify the terms and expectations for the transfer of ownership when specific events take place.
Essentially, a business succession plan allows you to provide step-by-step instructions for a smooth transition in your business and ensure that selected individuals assume critical positions within the organization in the event of disability, death, or retirement.
Why Is a Business Succession Plan Important?
The primary purpose of a business succession plan is to make sure that a company is prepared for any expected and unexpected changes in the future. Without a business succession plan in place, your company may not be prepared for potential transitions or any other forms of uncertainty. You never know when a disability, accident, or another unexpected event will occur. However, you can prepare well in advance with a business succession plan to make sure that your company continues to operate. Business succession planning is also important to minimize the taxes associated with transfers of ownership.
What Are the Steps of Creating a Succession Plan?
If you think your business can benefit from a succession plan, you need to know the steps of creating a business succession plan. In order to develop your unique plan, you need to consider the following elements to ensure that your company is prepared:
The type and size of your business
The organizational structure of your company
The scope of your succession strategy
The implementation of the succession plan
The identification of the right candidates who will take on leadership roles
When creating a business succession plan, it is important to choose the right succession planning strategy. Some of the strategies include passing leadership roles down to employees, leaving the company to an heir, or selling the business to a co-owner or third party. If you want to create an enforceable succession plan tailored to your specific objectives and circumstances, hire an experienced attorney to help you determine which business succession strategy will best serve your needs.
What Common Obstacles Should Be Mitigated?
There are certain obstacles you should be prepared to mitigate when developing a succession plan for your business. A knowledgeable business planning attorney can help you identify the challenges you may face and the solutions you can implement to avoid common obstacles. Some of the most common challenges that you may face when developing a business succession plan include:
Not seeing the long-term perspective. A business succession plan is not something you should create overnight. Business succession planning takes time, thoughtful consideration, and legal guidance. In order to develop a successful plan, you need to understand your company’s long-term objectives.
Not keeping the plan up-to-date. A business succession plan is not something you can forget about once done. Instead, you should always keep your succession plan up-to-date by ensuring a periodical review of the plan and its components.
Using a one-size-fits-all approach. A common mistake business owners make when creating a business succession plan is thinking they can use a one-size-fits-all approach. However, it is critical to consider your company’s unique attributes, objectives, and needs in order to create a customized plan.
Turn to a Knowledgeable Attorney
Considering creating a business succession plan? Turn to our business and estate planning attorney at Law Offices of Kelton M. Burgess, LLC, for legal guidance. Our attorney in Pittsburgh, Pennsylvania, serves clients throughout the Greater Pittsburgh area. We can guide you through the business succession planning process and help you address any issues that may arise. Contact us today to get started.