A successful finale. If you are an entrepreneur, what is the final act for you and your business? If you have been successful, you likely want the company you created to be able to continue once you are no longer at the helm. For that reason, many people in your position create a succession plan to implement when the time comes.
What do you need to think about? It may be helpful to start with the end – that is, visualize how you see things looking without you in charge. You have an opportunity to guide your company to a potentially lasting legacy, as your staff contends with the changes. If there is a sense of continuity in place, this may allow the transition to progress more efficiently.1
It may also be wise to plan for succession to take place in stages, some of them unfolding while you are still at the wheel. This will allow you to determine who in your organization is ready right now, the individuals who you will want to train, and tasks you will want to undertake during later phases of the transition. Another important thing to consider: who will be your successor? Will you divide your tasks amongst multiple people? All important factors to consider.1
Who’s on your team? Who will be helping you create your succession plan? Naturally, you will want input from trusted people within the leadership of your organization, but you may also want to consider outside perspectives.
You may want an estate planning attorney on your side. Especially in the case of a family business or a situation where your family plays a part in your intended succession. An estate planning attorney could also help you navigate any state laws that may apply to your business. Additionally, if the transition is preceded by death rather than retirement, it will be helpful to your family and your company to have someone to look out for any complex issues that may arise.2
Does life insurance play a part in your succession plan? If you’re the person in charge, a part of your plan might involve key person insurance, which allows your company to replace income that might be lost by your business in case you suddenly and unexpectedly die. This could be the difference between your business being able to negotiate a difficult time or fold up because there’s no contingency in place.3
Succession planning involves a careful consideration of where you are, where you want to be, and how you are going to get there. It also involves planning for positive outcomes – and less-than-desirable ones. By making these decisions now, you can create a scenario in which your company is ready for your absence, and you can rest easier knowing that your business is prepared when that time comes.
Contact me with questions or concerns.
Robert J. Tuzzo, CLU®, ChFC®, MSFS
Total Financial Concepts, Inc
106 Apple Street Suite 204
Tinton Falls, NJ 07724
1 - forbes.com/sites/forbescoachescouncil/2018/09/27/the-importance-of-succession-planning-and-how-you-can-start/ [9/27/18]
2 - thebalance.com/do-you-need-to-hire-an-estate-planning-attorney-3505703 [4/29/18]
3 - forbes.com/sites/catherineschnaubelt/2018/11/26/4-reasons-you-should-consider-life-insurance-as-a-planning-tool// [11/26/18]
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