Building a Legacy: The Importance Of a Business Succession Plan

Based on figures from the U.S. Small Business Administration, approximately half of small business owners, which equals to around 28 million people, are at least 50 years old. This means that they may be at the point in their lives when they are deciding on what to do with their business.

Image source: engracefinancial.com

Owners have choices as to what to do with their business when they eventually retire, when they decide to change careers, or move away from their present location. A little less than 80 percent of small business owners, according to a study by CNBC and the Financial Planning Association, intend to sell their business, which they would subsequently use as retirement funds. 

There are some, though, who would rather pass down the business to someone they trust that can continue the legacy they have built. And for this, a succession plan should be created. 

It involves more than just choosing a successor from the family or within the organization, which itself is already a difficult, sometimes emotional, decision. 

There also needs to be a formal training program for potential successors that will ensure a smooth transition if the time comes for a change in leadership. It is not enough that the successors learn their executive duties, they also have to understand the heart of the organization. 

Image source: karaco.com.au

Daniel E. DeKoter is a Sibley, IA-based attorney who specializes civil litigation, business and employment, and estate planning law. Visit this blog for similar reads.

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