Business succession planning is the process of passing a business on to someone else. For many business owners, this means giving it to the next generation. It’s a family business and they want to pass it on to their children. But there are also options to pass it to other employees, other owners or even to a third party.
As you try to figure out how to put this plan in place, you may be considering how soon you need to begin. When should you get started?
It’s never too early
As a general rule of thumb, it is never too early to do business succession planning. It is advisable that you do not wait until the last second. Many will say that you need to at least begin this process between 3 to 5 years from the time that you want to cede control of the company to someone else.
But you can’t start too early because there’s just so much that has to be done. You should ideally bring this new individual into the company and allow them to work with you for years so they can learn how to run the business. This helps things to go much more smoothly than if you simply handed them the business as you retired and assumed that they would learn the ropes on their own.
Plus, as with any estate plan, you can always adjust your plan if the future requires it. You’re much better off starting planning when you think it’s too early than accidentally waiting until it’s too late.
As you get this process started, just make sure that you understand all of the legal options at your disposal.