When Should I Think About Business Succession?
A frequent and expensive oversight in business succession planning involves delaying the process too long. The pandemic prompted many business owners to reconsider their succession and retirement strategies.
According to PwC’s 2021 US Family Business Survey, only a third of US family businesses have a robust, documented, and communicated succession plan in place.
Why Starting Early Matters
Postponing succession planning creates several problems:
- Leadership gaps: Without adequate preparation, qualified individuals may not be positioned to manage the business.
- Tax complications: Delayed planning restricts available tax reduction strategies for both the business and personal estate.
- Business failure: Poor transitions between generations can cause enterprises to fail.
- Relationship damage: Sudden or directionless exits create leadership vacuums that harm client and customer relationships.
Six Key Transition Areas
- Founder Transition: Clarify retirement timeline and succession intent.
- Family Transition: If passing to children, define changing roles and authority structures.
- Business Transition: Plan how operations and customer relationships continue.
- Management Transition: Identify new leadership composition and evaluation methods.
- Ownership Transition: Determine transfer mechanisms.
- Estate Transition: Align your estate plan with other transitions.
Implementation Strategy
Formal documentation typically facilitates these transitions through operating agreements, buy-sell arrangements, and trusts. Consulting an estate planning attorney sooner rather than later ensures comprehensive planning and protection for both business and personal interests.
Contact The Stegall Law Firm to start your business succession planning today. The earlier you begin, the more options you have to protect your business and your family’s future.
