We get it—it can be tough to think about handing over something you’ve invested so much in. But try thinking of it this way—having a succession plan sets up the business you’ve worked so hard to build for ongoing success.
We chatted with Andrew Patricio, entrepreneurial wiz and founder of BizLaunch, to get his suggested steps on how to make sure your legacy is left in good hands.
1. Get together with the right people
There’s a dream team of four professionals you should talk to when making a succession plan: your accountant, lawyer, banker and financial advisor. They’ll round out your management team to make sure there’s a smooth transition when the time comes for you to exit your business. Not to mention, they’ll also help with your estate and retirement planning.
2. Go on a successor hunt
It can feel daunting to find someone to take over your business. Not everyone has an obvious candidate—like a son or daughter—who’s willing to step up when that day comes. Look at family, friends or people within the company who exhibit excellent leadership skills—you just never know where the perfect successor may be.
3. Get it in writing
When you make a written succession plan, it should cover five to ten years up until the transfer of ownership. Include an outline of the positions, expectations and responsibilities your successor will fulfill. Your plan should also have a timeline showing when you plan on retiring, transferring business ownership, and handing over voting rights to your successor. And don’t worry, this written plan isn’t set in stone. You can modify it before the transition dates begin.
4. Assemble a Board of Advisors
These are your inner circle, a trusted group of professionals and non-competing mentors who will advise current management and your successor during the transition period. Their goal is to make the transition as smooth as possible by helping new management with all aspects of the business.
5. Begin the exit strategy
This starts with making an official announcement of when you’re planning on transferring operating control to your successor—this usually happens 12-18 months in advance. You’ll transfer all ownership and voting rights to your successor, and initiate your plan to continue your standard of living through a retirement plan.
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