At some point, a moment comes for every entrepreneur to think about their successor. Selling your own company or handing it over is demanding. The replacement process is often emotional. Corporate succession is a challenging but essential issue. You should plan the succession in good time so that your future and that of your company are secured.
Involving legal experts in the process is essential for a smooth transition. At an older age, you can contact an estate and elder care lawyer like Cherry Hill, NJ elder law attorney to ensure successful business succession planning.
Due to the complexity of the succession process, it is advisable to start planning at an early stage.
When is it time?
There are different views on when succession planning should begin. There are proponents of “10 years before” and “just before the 65th birthday”. Long planning can lead to success just as much as a spontaneous decision. That doesn’t mean that you can just take chances. Planning for succession should be an ongoing task for the forward-thinking entrepreneur. This usually includes a business buy-out agreement to outline and define, in advance, what is to happen in the event of the death, disability or retirement of an owner or the sale of an owner’s business interest.
A favorable moment
When the right time has come depends on various factors. Your age is, of course, crucial, but so is the phase in which your company is. The state of the industry and your family background also influence whether the moment is right for a handover. A handover is also ideal if sustainable growth is demonstrable to be expected for your business.
How to Plan a Successful Business Succession
We have put together eight tips for you so that nothing stands in the way of a successful succession plan.
1. Plan Early
Entrepreneurs often start succession planning far too late, which is understandable because many have trouble parting with their heart project. In the worst case, the results are a hasty sale or an unwanted liquidation. Ideally, you should seek professional advice eight to ten years before you want to leave the company.
2. Let Go
According to experts, the emotional separation process is one of the biggest stumbling blocks in succession planning. Here, too, the following applies: You should deal with the topic at an early stage and get support so that you can ultimately hand over your life’s work into good hands.
3. Build a Successor
Whether a family-internal or external succession solution, restructuring takes time, and a successor must be set up and trained early. This is all the more important for small companies where a lot of know-how lies with the owner.
4. Stay Flexible
Entrepreneurs tend to fixate on a single succession solution. However, the preferred candidate may suddenly get cold feet shortly before signing. So what? Create a requirement profile, check alternatives and stay in contact with as many potential buyers as possible.
5. Do You Have Realistic Price Expectations?
Determine your company’s value with your bank or specialist and clarify with a successor specialist what room for negotiation your financial situation allows.
6. Don’t Get Bogged Down in Price
Unfortunately, many entrepreneurs immediately dismiss an offer that falls short of their expectations. Under certain circumstances, however, you may miss out on the right candidate who will continue your life’s work with just as much passion as you did yourself. And that’s what you really want.
7. Communicate Solutions
An upcoming succession plan can unsettle employees, customers, and suppliers. Therefore, do not communicate too early, but only when a solution has been found.
8. Get Support
Bringing in a follow-up specialist is money well invested. Many underestimate the administrative and legal effort involved and are overwhelmed by the paper war. Contact a lawyer and other experts who will help you through the process.
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