February 9, 2022

Best Practices for Passing On Your Business

When is it time for an entrepreneur to pass on the business, and how do you do it? If you’re a business owner or operator who wants to see your business continue to succeed long into the future, at some point you’ll need to cross this difficult, emotionally-laden bridge. Maybe you’re starting to see retirement age creep up on the horizon, or maybe you’ve had a health scare and are starting to realize that your staff needs a plan should the unthinkable happen, or maybe you’re seeing newer, younger generations of staff stepping up and finally realizing that the business can survive without you. Regardless of the reason, you need a succession plan, and here are some best practices to help set you and the next generation of business owners and operators on the right path:

Make a plan and commit to it

The first step is the hardest: acknowledging that yes, you do need a plan for how to pass the business down to the next generation. Once you’ve acknowledged this, you can start to plan for how this will actually happen. This isn’t just a matter of assigning a successor (although that will likely be a part of it): Will you maintain a financial stake in the company? Will you stay on as a board member? Will your job be taken over entirely by one person, or will your duties be distributed amongst various executives? These are the sorts of questions you’ll want to address in your plan.

Of course, once you make a plan, you need to stick to it. Obviously things can and will come up that may alter the plan, and unnecessary rigidity can be harmful, but making sure that you follow the plan as best you can–and officially amend it if and when you need to rather than just tossing it out wholesale when things get difficult–will make it far more likely that you can move on successfully.

Communicate openly, honestly, and frequently

When creating a succession plan, it’s important to involve the people who it will directly affect. While some aspects may be deeply personal, the plan should by-and-large be crafted with the collaborative help and input of the people who will succeed you, so that nothing comes as a surprise. This is also the time to be honest and have difficult conversations–if someone’s angling for a leadership role and you’ve got reservations about their ability to do the job, now’s the time to talk to them candidly about what you need to see in order for them to be part of the plan.

Additionally, communication shouldn’t just be a one-time thing. Having regular succession plan meetings will ensure not only that everyone is on the same page, but that they stay on the same page with updates and developments. It could be as simple as an annual meeting plan if your retirement is far out, but could become more frequent (monthly, weekly, even daily) as you inch closer and closer to leaving.

Learn to let go (and find something else to grab onto)

As an entrepreneur, it’s likely that a significant portion of your identity is tied up in your business, and rightfully so! You’ve put in countless hours, sleepless nights, and untold stresses creating and running a successful business, and it’s only natural to feel a bit rudderless or anxious at the thought of suddenly having all that out of your life. The most personal part of a succession plan will be taking stock of your values and planning a life after succession–do you want to finally spend more time with your kids or grandkids? Have you always wanted to spend your days relaxing on the beach? Will you stay on the board as an advisor? A great succession plan isn’t just about how the business will survive without you, but also about how you’ll survive without the business.

Find Success in Your Succession Plan

Passing a business on to a new generation can be one of the most difficult parts of an entrepreneur’s life. Your business is your baby, and you want to make sure that it continues to thrive in your absence. This is why it’s so vitally important that you don’t leave succession up to chance, but instead create a plan with intentionality and commitment so that this stressful, emotional process goes as smoothly as possible for everyone involved. At Segal Duffek Moen, we’re here to help you navigate this difficult stage of a business’s life by acting as a neutral advisor and bringing in the wealth of legal knowledge to ensure that every base is covered. For advice and help crafting a smooth succession, contact Segal Duffek Moen at 952-358-7400 or by emailing Info@Segal Duffek Moen.com.