The importance of succession planning

If you own a business, the income from it will likely form a significant part of your estate. At least it will right now. If you were suddenly left incapable of running things or were to die without warning, then the future of this income source could be in jeopardy. That could leave your loved ones with a far less secure future than if you had put a plan in place to enable the business to continue without you.

Succession planning is the name given to planning for someone to take over the running of the business from you. It can be just as useful if you decide to step back from the business to concentrate on other things, such as enjoying your retirement, as you could then benefit from the continued income.

Here are a few tips to consider.

Start early

Let’s say you want your eldest child to take over the reins. Start bringing them into the business little by little so that by the time they have to take over, even if it is many years from now, they will have gained a long-term view of how things operate. They’ll have seen that businesses can have peaks and troughs and so forth. Starting early also reduces the need to cram knowledge into them when things become urgent.

Have backup plans

Maybe your eldest child decides they don’t want to follow in your footsteps after all. Or perhaps they just want to live a little first. You might choose to give your second eldest knowledge of how things work, so they could act as backup. Or have some of your trusted managers prepared to step up and take the reins until your child is ready to take over.

Seeking guidance to learn more is a good place to start.