Do you own a small or family-owned business? And if so, do you have a succession plan? One of the most commonly overlooked estate planning tasks is succession planning. You’ve worked hard to establish your business. It’s important to protect and preserve it for the benefit of your heirs. Here are a few business succession planning tips to get you started.

Document Critical Information

When it comes to the operation of a business, succession planning is an ongoing task. If you were to die today, what would someone need to know to keep your business going? It’s critical that you start documenting this information. The list will be specific to your business, but here are a few things you might include:

  • Supplier Lists
  • Customer Lists
  • Service Providers (Attorneys, Accountants, Bookkeepers, Credit Processors, Cleaners, etc.)
  • Software Programs and Licenses
  • Account Information and Logins
  • Standard Operating Procedures
  • Schedules and Due Dates (i.e. License Renewals, Reporting Deadlines)
  • Legal Contracts

Keep this information in a secure location, but make sure a trusted individual has access to it in case of an emergency. As you can imagine, this can be a lengthy task to complete. It also requires continual updating as information changes.

Identify Your Replacement

Next, think about your replacement. Should one or more of your heirs take over management of the business? Should someone be hired? If so, what qualifications are necessary to perform your duties? Creating a profile for your replacement can help your heirs quickly hire someone and avoid interruption of the business. For any family members who may be involved, consider exposing them to the business early on to make it easier to transition. Otherwise, you may take years’ worth of knowledge with you and leave your business struggling.

Establish a Plan

Lastly, you must actually create a plan. Who should be responsible for hiring a placement? What should be the salary range? Who will oversee that employee on a regular basis? What is the source of funding for salaries? Are multiple hires needed? Effective business succession planning requires a focus on both information and logistics.

More Business Succession Planning Tips

Every business is unique, so every business succession plan must be as well. Consult with an attorney to review your plan and identify any missing pieces. Make sure proper legal instruments are in place to launch the plan when needed. Discuss your plan with anyone who may be impacted by your decisions or who may bear responsibilities. With a well-thought-out business succession plan, your business can continue to thrive after the loss of your leadership and will hopefully carry on through multiple generations to come.