Executing a business succession plan is crucial for the continued success of your business. Most small business owners fail to plan for the future. About 60 percent of small businesses have not prepared a plan of transition. Understanding the common ways companies are passed down will help you find the best option.
Typical small business transition plans
Deciding who will take over your company requires careful evaluation and thought. When drafting your transition plan, you have the option to sell or gift the business to:
- A business partner: If you are not the sole owner of your business, selling your ownership rights to a business partner is worth considering. Having someone you can rely on will allow the transition process to flow effortlessly.
- Your children: If you have children who are ready to take over, you could pass the business down to them. You may also be able to keep the business in your family’s name for generations to come.
- An employee: Selling the business to a highly skilled and cherished employee can also create a smooth transition. While this plan may not be as common as the others, it is still a viable option.
To avoid making any errors when creating your succession plan, speak with an experienced business law attorney. Hiring a lawyer will give you a better understanding of laws on business succession. Your lawyer can also provide recommendations while you create your plan.