What should your business succession plan look like?

On Behalf of | Aug 25, 2020 | Estate Planning

Washington residents like you can use your estate plan in many ways. If you own a business, a large portion of this plan will likely end up dedicated to the maintenance of the company. There are many categories for you to cover. They are all focused on successful transfer of ownership.

The more time you spend streamlining your succession plan, the better. It saves you and your successor time, energy and money. This is why it should hold a place of priority as you work through your plan.

Building the base of your plan

Fit Small Business looks at ways that you can have a successful transfer of ownership. There are certain steps you should take while formulating the plan that allows you to do this. First, determine the timeline you are working with. Do you want to work until you pass away or become physically incapable of continuing? Or do you have the desire to retire around a certain time?

Next, pick a successor. There are many ways in which you can do this. You can pass the business on to an heir. You can select a work partner or even employee to inherit your business. Try to aim for around three candidates. This way, you will not have to start from scratch if one cannot take on the task.

Streamlining the transfer

Third, make your standard operating procedures formalized. This means documenting them in detail. Some things you need include an employee handbook, operations manual and organizational chart. Record and processes or meetings that recur.

Fourth, value your business. Once you value it, keep this updated. And finally, fund your succession plan. Include options like loans, seller financing and life insurance. In some instances, the successor will not have to purchase the business, though. Edit any tip or step according to your personal business needs.