No matter how big the business is, so much can be at risk if you fail to prepare as its owner. Aside from your livelihood, your employees may suffer if the organization suddenly tanks because of unpredictable incidents. Fortunately, there are ways to address these risks, such as through effective succession planning.
Most small businesses may feel apprehensive about investing time and effort into this process, but it could be essential based on the circumstances. Before you create a succession plan, considering the following factors could be vital:
- Candidates who can take over – This step can happen with help from C-level executives and the board of directors for large corporations. For smaller organizations, such as family businesses, it is still crucial to determine who can oversee the company, choosing based on willingness, commitment and skill.
- Competence and experience – Pinpointing effective strategies to develop successor competency is also beneficial. These steps can help pass on the knowledge and skills built through experience necessary for the business to thrive.
- Legal arrangements as protection – Some business partners can obtain insurance coverage naming the other person as their beneficiary, known as a cross-purchase agreement. Similar arrangements help secure business operations by allowing the surviving party to take over when one of them passes away.
Aside from these considerations, other details may also be relevant according to the business needs.
Addressing your succession planning needs
When making a succession plan, it could be better to do it sooner rather than later. Business-impacting incidents can be unpredictable, affecting the entire organization without adequate preparations. Consider seeking legal counsel immediately, mainly if you can foresee risky scenarios that can happen soon. Having plans can give you peace of mind, knowing that your business will be in good hands no matter what happens next.
