Business succession planning is the process of figuring out what will happen with your business when you can no longer run it yourself. It can be part of your retirement or estate planning, depending on when you feel you will stop working.
SCORE explains that you want to have a plan in place well before it is time to hand over the business to someone else, so it is a good idea to tackle business succession planning as soon as possible.
Choose your strategy
The first step in planning is to decide what your end game will be. You can either transfer ownership to an heir or sell the business to someone outside your family.
You should have meetings with family members or potential heirs to find out their feelings about taking over the business. It is essential for the future that you pass the business on to someone who wants to run it.
If you want to sell, you will have to take the time to screen potential buyers. You will also have to determine if you will sell prior to your death or transfer the ownership upon your death.
Regardless of what you will do with the business, you will need to get a valuation. If you are planning a long time prior to the time you will leave the business, then you may need to get a valuation again closer to that time. Valuating your business can help you to understand how much to charge for it. It also allows you to handle other financial details of transferring ownership.
The final step is determining when you will transfer ownership. You will need to get all the legal aspects in order so that the transfer can occur smoothly.