For many business owners, succession planning is far more stressful than the rest of their retirement and estate planning process. In their eyes, far more important than what happens to the house or car or 401(k) is what happens to the business they have put their blood, sweat and tears into.
Even worse is the fact that family members and even friends may feel entitled to that business, even when they did not lift a finger to help build it. This can create tension when it is time to decide who steps into the management or ownership role when the business owner and CEO retires.
Focus on more than staffing
Forbes states that smart CEOs do more than focus on who gets to step into what role after they exit the business. Instead, a good succession plan also encompasses the organization’s culture and how to keep it alive when the owner or CEO is no longer with the company.
Keep it a secret
When emotions run high over the ownership of the business, sometimes it is better to keep the plan a secret. This can lead to problems if the person chosen does not feel prepared for the position or is not as suitable as someone else might be, so choose wisely.
Depend on the board
Not every company has a board of directors, but those that do have excellent advice at their fingertips. Forbes recommends getting their feedback on who they believe might be a great candidate for the job. Then, make the decision with the board or in private.
Write it down
One good way to solidify any plan is to commit it to paper — even if that is only figuratively done. Forbes also recommends sharing the plans, provided that the intention was not to keep it secret. If secrecy is key, ensure the right people have immediate access to the succession plan when the time comes.
Succession planning is a stressful time for any Texas business. There are not just management considerations to make, but also legal and financial moves to consider.
