What will happen to your business when you can no longer run it? Do you have a plan in place for who will take over when you pass away? If you wish to keep your business around for generations, then you need to create a business succession plan.
According to SCORE, a business succession plan outlines who will take over your business after you and details the information needed to run the business. Any business can benefit from such a plan, but it is especially useful for those businesses owned by a sole proprietor. A plan is helpful for situations where a partner needs to leave the business, the owner dies, an owner gets a divorce or an owner dies.
Develop a plan
Some people have a solid idea of what they wish to happen with their business. If you have a general plan, then creating your business succession plan is as easy as putting everything into writing and making sure you have a legal document outlining things.
If you are unsure of what you want to do, then you need to take the time to think about what makes the most sense in your situation. Should you pass it onto an heir or do you want to bring in someone else? Think about how this change will affect the business as well.
Start with your business valuation. Figure out how much your business is worth. This is helpful if you wish to split the business between multiple heirs. It is also a requirement if you want to sell.
Prepare for the takeover
Once you have your plan in place, you need to put things in place to allow the new owner to take over. While this may not happen for many more years, it is a good idea to prepare the new owner right now. Put processes in place to make things easier for the new owner to take over.