Exiting your business can be a stressful time if you haven’t planned it. Ill health, death in the family and early retirement are all reasons people choose to leave a business quicker than they thought. Having a succession plan can greatly reduce the stress and inconvenience of this time. Without a plan your business will be left to chance.
A succession plan ensures your business will continue to operate and outlines how you want the business structured when you decide to exit it. The plan will show who you will like to take over specific aspects of the business, if you are selling the business in it’s entirety, if you are still planning to be a part owner or silent partner etc.
This brings us to the two main plans for succession planning.
This agreement usually ensure the business will continue after a disruptive event such as a death or incapacitation. This is a legally binding contract, which controls when owners can sell their part in the business and at what price.
Planning to keep the business in the family when the owner decides to leave includes legal obligations and consideration for other family members. Don’t assume the family want the business. Discuss this option before transferring.
More information can be found on the Governments website.