Starting and running a business should involve a fair amount of effort and sacrifice. Many business owners today, however, tend to get busy more with building wealth than preparing for the worst-case scenario. It seems like they would rather let a top employee leave than consider the process of succession planning. Only few would say that it is an essential part of doing business, treating it as an exit strategy.
With busy schedules, many clients calling and everything seemingly going well, it can be easy to put off planning. But, can you afford to ignore it? This article lists down the reasons you need to develop a succession plan.
To Identify Future Leader
Having a reliable leader is the key to keep your business going. But, without a succession plan, you can’t achieve what you desire to happen. This is not the right time for wishful thinking. You need to find the right person with experience, skills and potential to pass the reins of leadership.
To Handle Finances
Discussing finances is a top priority, and a succession plan can help you protect your assets. As Creagh Weightman Lawyers, a leading commercial law firm in Australia, puts it: “A succession plan can identify who will takeover the business when you exit – but it’s more than that. More importantly, it involves planning well ahead by establishing financial structures to minimise taxation on the distribution of profits and assets and to protect against the risk of future claims on your assets.”
To Save Business
No matter how healthy you are or how good your employees are at predicting earnings, no one can truly know when a problem is coming. Whether it is a chronic illness or retirement, you need to know how your business will stay afloat afterwards. A succession plan is important in making sure your business will survive and thrive when you are no longer in charge.
Some business owners argue that a verbal discussion or a written will is enough. Without a solid succession plan, you cannot make smart financial decisions and have trouble passing on your business.