It’s the one part of running a business that no one ever wants to talk about. Succession planning is the process of drawing up a contract that outlines who will take charge of your business if you are incapacitated or pass away. While many people wrongly assume that their business will go on as normal and the most logical person to take care of your business will take the helm, this simply isn’t the case. Without succession planning in place, your business may be sold to settle debts, or to allow for it to be equally divided between parties.
If you want your business to thrive in your absence, sitting down with a solicitor to determine your succession plan is the best thing you can do. Here are four reasons succession planning is essential for business owners:
Decide Your Businesses Future
You probably already have an idea of who you want to run your business in your absence, even if you haven’t given it any real thought. Perhaps one of your senior managers would be the ideal candidate to take over your business, or maybe one of your children works in the business and would make an ideal owner one day. If you want to have a say in how your business is run after you are gone, succession planning in the form of a will is the way forward.
Prevent Unnecessary Disputes
As mentioned above, you might have one child who works in the business while the others have forged their careers elsewhere. Without a will in place, the business may be split equally between all of your children after your death. This can lead to family disputes which can easily be avoided. If your business is taken out of the equation but all of your children can still benefit from the business while one is left running it, this is highly preferable to one child being forced to buy out their siblings in order to keep running the business.
Savings for Your Spouse
If you pass away without succession planning in place, your business will be passed to your spouse. If they decide to sell the business, this will become part of their estate and will be subject to inheritance tax for you children when your spouse passes on. However, if the business is placed in a trust after you pass away, your spouse can continue to benefit from the business without the worry of having to run it.
Security for your Employees
If you employ people in your business, succession planning will ensure their futures are more secure. They won’t have to worry about losing their jobs if you are temporarily or permanently unable to run the business. When working for a small business, it’s always a lot more uncertain for employees as market forces are more likely to have an impact on day-to-day operations. By hiring will solicitors to ensure correct succession planning is in place, you will be doing the responsible thing and giving your employees greater job security.
Author: Veronica Pembleton is a freelance writer and small business advisor currently living in London. After training as a legal professional, she decided to pursue a career as a freelance writer, helping small businesses with all aspects of the law. She works closely alongside Gorvins solicitors, specialist will solicitors, to advise small businesses on succession planning best-practices. Follow @Gorvins on Twitter and @GorvinsSolicitors on Facebook.