Do You Have an Exit Strategy?
Whether your business is brand new or you are celebrating a milestone anniversary – every business owner should have an exit strategy. Succession planning is crucial for businesses of every size. However, this is a task that many people put on the back burner.
Working on an exit strategy well in advance of a planned exit is one of the best ways to reduce disruptions to your business when you or other key players do leave the company. It can also help ensure that the business is best prepared to continue running smoothly regardless of who takes over or what changes are made.
How to Build a Strong Succession Plan
Exit strategies come in many forms. When planning for an exit, it is important to consider all options and understand their implications, from selling the business to passing it down to family members or employees, or even selling the business.
One of the most important things you will need to do to create a succession plan is to thoroughly evaluate your finances. You may want to get your business professionally appraised to get an accurate understanding of its value. This will help you determine how much potential earnings are available and what the best course of action is when it comes to selling or passing down the business.
You will also need to identify potential successors. It is important to consider all of your options, including family members and employees who may be interested in taking over the company. If you can, start mentoring those individuals now. When employees know that there is a chance for advancement, they are more likely to put forth maximum effort at their jobs and remain loyal to the company.
Organization and proper record-keeping are other key aspects of building a succession plan. You will need to make sure all necessary information is documented and that it can be easily accessed. This includes financial records, contracts, and legal documents.
Finally, a strong succession plan must include contingencies. For example, what will happen if the successor is unable to take over? What are the plans for the business if there is an unexpected death or disability? Having a plan in place to address these potential issues will help ensure a smoother transition in the event of an emergency.
Contact Our Naperville Business Law Attorneys for Help
Creating an exit strategy is essential – whether you plan to leave the business soon or in twenty years from now. Life is unpredictable and it is important to be prepared for any changes that may occur. Contact our Naperville business lawyers for help building a succession plan, buying or selling a business, drafting robust business contracts, and much more. Call 630-756-1160 for a consultation today.
Please note: These blogs have been created over a period of time and laws and information can change. For the most current information on a topic you are interested in please seek proper legal counsel.