Many small businesses are family owned. While family owned businesses enjoy the benefit of familial solidarity, their strength is often threatened when it’s time for leadership or ownership to be passed down. Succession plans help ensure the transition from owner to owner is an easy one, but many small and family-owned businesses do not have such a plan in place.
You may think that succession planning doesn’t reap immediate benefits, and as a result overlook it as a critical component of your current business success. However, what we’ve repeatedly found is that succession planning now strengthens your business, supports it to grow now, and allows for the longevity and legacy you desire.
And, the best part of succession planning is that it can allow you to chart the vision for your future, as the business owner, so that you can begin to experience the freedom you may have desired when you first started your business.
Employees brought in from outside the company (and the family) might become disappointed with the opportunities—or lack thereof—for growth. A family-owned business that cannot attract talent to take the reins and keep the company viable throughout a leadership transition is risking a lot and can keep your company from the growth you desire.
Small business owners need to clarify each employee’s role, including any limitations. Being upfront about the room for growth can help employees make the most of their positions and allow them also to be clear about what they want out of the role and how they want their talents to be used. Small business owners should be flexible when attracting top talent. If they are not able to provide them room for growth, they should be sure the position is worthwhile in other ways if advancement is not a possibility.
When a business owner starts from the ground up and sacrifices years of time and money to grow his or her business, it can be hard to let it go. Some business leaders are reluctant to retire because they have a psychological investment in the company. This can create significant barriers to succession planning before it’s too late.
Begin by creating a phased transition plan. A phased transition plan can help you to retain some involvement while incoming leaders learn the ropes. This works to break down the barriers in passing the baton. Easing out of and into new roles creates a more successful transition as the incoming leader takes time to get to know and understand how the current leader sees the future of the company.
If you are ready to create a succession plan, start by sitting down with us. As your Creative Business Lawyer®, we can guide you in making the difficult decisions you face every day as a leader in business, including when and how to hand off leadership roles. We can look out for your business’s future, so you have time and energy to focus on growth and expansion.
This article is a service of A. J. Yolofsky, Creative Business Lawyer®. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule a consultation.