We’ve had many discussions recently with business owners about what happens to the business when they want to retire or are unable to work in the business anymore. Wouldn’t it be tragic if the moment you walked away the business could no longer exist?
Many business owners think they can simply sell their business when they decide it’s time to retire. Unfortunately, it’s not as easy as it might seem. Surveys show that well under half of business owners have a written succession plan for their business.
The consequences of not planning have a number of potential problems such as:
- Upsetting long time customers
- Losing key employees
- Losing stability of the business
- Not being able to properly sell the business and recognize its actual value
- Losing financing options needed to continue the business
Here are a few steps you can take now to begin the succession planning process:
Engage family members and key and long-term employees.
Do you have family members working within the business? Do they want to continue on in the family business and are they competent enough to run the business?
Often a long-term or key employee is interested and capable of running the business.
It’s more than who will take over and when will they take over.
If you’ve done strategic planning you will understand where your business is headed in the future and who might be best able to lead the business.
You must start immediately, this process will not happen overnight. Good succession planning starts years before any change in ownership or leadership will occur. You can look to groom some of your high-performing or key employees early.
Build a team of advisors to help with your planning.
It is important to engage a number of advisors that will understand various aspects of how succession planning will affect you financially, including:
- Estate Planner/ Financial Advisor
- Business Consultant
- Relationship Manager from First Commonwealth
First Commonwealth is here to help you plan for the future of your business. Our team of Business Services officers and Wealth Management professionals can help you plan the best way to transition you and your business into the future.