Succession Planning to Protect Your Business

Adam Hecht, Business Law, Corporate, Northbrook Attorney

Businesses are structured in a way that certain personnel and processes are required for smooth running and operations. This means that the absence of key personnel in specific roles will cause significant strain on the business and may have grave consequences on operations.

For roles like this, it is essential to make plans that provide backup for such emergencies and guarantee stability. This is where succession planning comes in. It is a mechanism through which businesses ensure that they can fill up key roles with capable and skilled replacements in the event of unforeseen circumstances. This way, unplanned events will not come in the way of achieving business objectives now and in the future.

Succession planning as a business owner also saves you from worrying about what happens to the hard work you have put into building your business. By creating and discussing your succession plan with your business attorney, you can rest assured that there is a structure to managing your business affairs in your absence.

Whether you are a small business or a large corporation, succession planning is essential. Planning allows you to be prepared for changes in personnel, whether long-term or short-term. It provides a plan for resignation, retirement, and death. The additional benefit of growth structures is also helpful for personnel.

Here are more reasons you need a succession plan:

  • A succession plan allows you to provide liquidity for yourself and the other business owners. In the case of your retirement, you need a mechanism that will enable you to sell ownership interest.
  • The transfer of business ownership comes with heavy tax implications. Having a succession plan can help reduce your successors’ tax liability.
  • Stability and continuity in business are crucial. Without a detailed succession plan, your business will likely be in chaos in your absence. This is especially important if you are passing on your business to your heirs. With a succession plan, there is an organized framework that prevents such problems.

Asides from the succession plan for passing on your business, there are details to fine-tune to help internal processes. Key roles must be promptly filled should they be open through any circumstance. Find below some helpful guidelines for preparing for this:

  • Mark out what personnel is most critical to business operations. What capabilities do they have that are vital for the position? You will need to look for someone with the technical and behavioral skills to excel in that position.
  • What personnel outside the current position holders have both the interest and are qualified for said role? It might be time to bring them on board and help fill the knowledge and experience gap they may have.
  • You need to create a structure that allows talents to go up the ladder and be equipped to fill up roles. Consider the peculiarities of talent and map out a game plan that prepares them for the position.

At the law offices of Hecht-Schondorf, we have years of experience helping our clients navigate core issues around business succession. We can work with you to ensure that your wishes and interests are protected. We will help you navigate the essential things like your business power of attorney and selling agreements if you so desire. We can also make plans for wills and trusts if you plan to pass on your business to your heir. Contact us here today to begin.