There’s something about entrepreneurship that can’t be found in a 9 to 5 job. Sure, risk is involved, but few things can match the feeling you get from watching a business grow from an idea into a successful enterprise.
But what will happen to your business when you die? Will it cease to exist or are you expecting your family to take over the reins? And if you have more than one child, which of them will be calling the shots?
The purpose of a succession plan
A succession plan identifies and prepares future leaders to run your business when you retire or pass away. Without such a plan, your company may experience the following:
- Uncertainty among employees, clients and vendors about the company’s future
- Lack of direction or leadership could hurt operations and the company’s reputation
- Disagreements among family members over titles, roles and ownership
- Financial loss due to the interruption of operations and costly legal battles
- Loss of your legacy when the business falters and fails
Creating and implementing a succession plan takes time. After identifying potential leaders, you must ensure they are ready by equipping them with the skills and knowledge they need to take charge someday. Look for any gaps in their preparedness and address them with mentorships and leadership training.
You can also help minimize the potential for family conflicts. A clear strategy for succession sweeps away ambiguous expectations. Outlining roles, responsibilities and a path for transition can reduce tensions and misunderstandings.
If you haven’t already, you will want to have a conversation with your family about the continuity of your business. Get their feedback. There is the possibility that your children have their own future plans that don’t involve your company. In that case, you may need to look to a non-family member to continue business operations.
Whether a family member or a trusted employee takes over your company after you die, you will be assured that the legacy you put time and effort into will live on.
