As you established your small business in Illinois and watched it grow into a lucrative enterprise, you may have been focused on the here-and-now. However, the day will eventually come when you want to leave the business, for example, to retire. If so, you will need a business succession plan.
Identify who you want to transition the plan to
The first step you need to decide when developing a business succession plan is to determine who you want to transition the business to. For example, if it is a family business, you may have a child or other relative you want to step up to the plate when you bow out of the business. Or you might want to sell the business or pass it on to a key employee. Transition is unavoidable so you will want to ensure your succession plan has the right players in mind.
Your business succession plan will be unique
No two businesses are alike, and no two business succession plans will look the same. Some plans will include an exit date, and some will not. Some plans allow for a gradual decrease in involvement, and some will simply cut the strings following a certain date or event. All business succession plans, in addition to identifying the successor should:
- Include the valuation of the business;
- Include provisions for implementing the plan;
- Include provisions on how employees and customers will be informed of the transition;
- Include tax planning provisions; and
- Provide for contingencies.
This is only an overview of some subjects to touch on in a business succession plan. Your plan can be as detailed and complex as you want to make it.
Do not neglect business succession planning
Many business owners do not have a succession plan. This ultimately harms their interests and the business as a whole. It is better to prepare ahead of time. After all, you cannot remain in control of your business forever so it is best to plan for what your business will look like after you leave.