Running a small business takes hard work and determination. As a small business owner, you have never backed down from challenges, and now you can enjoy the fruits of your labor in the form of a strong, successful business entity. Any business owner knows that proper planning is a cornerstone to succeeding and having a plan for your successor is no different.
There are several types of succession plans a person can choose from. Maybe you expect to pass your business on to one of your children. Perhaps you want to hand it off to a stellar employee, or it may be the case that you are content to simply sell it off.
Types of succession plans
Having a formal succession plan in writing is vital to ensure passing off your business goes smoothly. This is something a professional attorney can help you accomplish in short order. Depending on your circumstances, the following plans may be right for you.
Give your business to an heir
Keeping a business in the family is a common decision. Passing your work to the next generation is a great way to make sure is runs similarly to how you ran things. If you choose to do this, it is often the best choice to choose a single successor. Splitting ownership across multiple children can lead to messy arguments among family.
Sell your business to a key employee
It is a fact that less than a third of family businesses survive the transition from parent to child. It may be a better decision to pass the torch to a trusted employee. Your employee will already be familiar with how the business is run and have business savvy. A succession plan with a buy-sell agreement will set a date of inheritance, decide the price and other critical details.
Sell your business to an outside party
Selling your business outright is always an option when you have achieved success. Selling your business of a local entrepreneur allows you to separate from the entity entirely and make a tidy sum in the process. This route does require more planning, however. You will want to prepare for the sale well in advance to ensure everything goes smoothly.
Passing the baton to the next owner of your business is a major decision. What you are hoping to get out of the deal will drive what kind of succession plan you investigate. Consider your options carefully and know that whatever your needs, there is almost certainly a way to make it work.