Every business owner should engage in succession planning and prepare for the future of their company. This strategy is needed to identify key personnel who will take over at a later time and ensure the company continues to grow when senior management retires or moves on.
Owners who engage in succession planning have a much better grasp on the overall strategies needed to take the company to the next level. Determining key personnel and the positions they qualify for in the future helps guide the entity in the right direction.
There are a variety of approaches that can be used to prepare a plan. Much depends on the type of business involved and the long term goals. It is advisable to work with a business law attorney. Experts can help owners implement succession plans and identify each key position and personnel to fill positions as they open up.
Many companies prefer to promote from within. This is a sound approach because it allows owners to groom persons who can assume key roles at any given moment. Owners can work side-by-side with key personnel and teach them every facet of the company.
Taking steps to develop plans ensures the business can continue operating without interruption if anything happens to upper management. For instance, if an owner has to take a leave of absence due to medical problems their successor can take over while they are gone.
Succession planning is also part of retirement planning. Regardless if the company is established as a sole proprietorship, limited liability company, partnership, or corporation it is imperative to designate a person to take control when the owner retires.
There is no one-size-fits-all plan. Each company has different needs and circumstances that must be addressed according to their mode of operation. Some companies promote employees quickly, while others bring them up through the ranks in slow progression. Some employees are hired to fill key positions, while others are employed with the goal of advancement based on performance.
There are many benefits of business succession planning. First and foremost, employees will be well-trained and capable of taking over key positions when needed. Second, employees will fully understand what is expected of them and will have a list of goals created specifically for their position.
It is a proven fact that when employees are aware of their future role within the company they stay motivated and dedicated. Employees who work for companies that appreciate and reward efforts with promotions almost always perform better and work harder to make the company successful.
For best results, owners should begin planning well in advance of anticipated needs. Doing so provides sufficient time to prepare employees for future roles. It also lets owners and key personnel continue to revamp strategies as the company progresses.
Lastly, business succession should be part of estate planning strategies to ensure the company is protected in the event of the owner’s death. Furthermore, estate planning is needed to minimize estate tax when passing along a family owned business to heirs.
The law offices of Craton and Switzer specialize in helping business owners establish succession planning, retirement planning, and estate planning. These tactics not only provide assurance that the company can continue to operate, but also deliver peace of mind knowing that everything is taken care of should the unthinkable happen.
We invite you to read more about the benefits of succession planning at our official blog. We provide information about a variety of legal concerns to help readers discover available options. If you are in need of a California business attorney feel free to contact us during normal business hours to schedule a consultation.