5 People to Include in Succession Planning
2019-05-06 | by Gene Reynolds
Succession planning is increasingly more relevant for today’s U.S. businesses that are run by baby boomers. According to statistics published by this business brokers association:
- Retiring baby boomer business owners will sell or bequeath $10 trillion worth of assets over the next two decades.
- Assets are held in more than 12 million privately owned businesses.
- More than 70 percent of companies are expected to change hands.
If your business falls into the category of needing to think about succession planning, consider starting with a simple step of involving the right people.
Who Should Be Involved in the Succession Planning Process?
We consider five categories of individuals or people who should be involved in succession planning to craft a plan that will maintain the company you built.
1. Identify Key Employees in Succession Planning
From our experience working with clients, we have found that succession planning is not as successful when decided in small circles.
Instead, open the conversation to key employees who have been with the company for an extended period of time, clearly are committed to the success of your company, have a passion for your company, and have shown aptitude for understanding the future of the business.
Key employees provide valuable and critical input that you may not have considered before crafting the succession plan.
2. Consult with Stakeholders or the Board of Directors
Depending on how your company is set up, you may need final approval from your leadership team, managers, or a Board of Directors for the succession plan.
The best way to advance the ball down the field to final approval is involving this group of key stakeholders at the beginning of the process.
Review options, gather feedback, weigh the pros and cons, and have productive conversations as early as possible. Then, you and your stakeholders can track progress toward the finalized succession plan, expediting the process of achieving final approval.
3. Consult with Colleagues On the Same Journey
Each company has its own succession planning journey. Consider consulting with other business owners, colleagues, and friends who are on a similar journey.
A colleague who has advanced the ball further down the field may have valuable insight on how to overcome specific hurdles that you have not even thought about yet. This input will prepare you to overcome the roadblock when you reach it on your journey.
4. Discuss the Future of Your Business with Family
No matter whether you keep the business in your family or not, you should involve family members in succession planning.
Family members can see blindspots and they will also offer very honest feedback about the future of the company. While discussions may be difficult — as family members will feel the change the most — they could provide valuable input that you won’t receive from non-family members.
Similar to the other group of influencers, family members should be involved early in the process. The conversations need to slowly ramp up, not feel like ripping off a Band-aid. Remember, your family members will be the most involved in your life after completing the succession planning process.
5. Consult with a CPA Firm on Succession Planning
Finally, consider consulting with a CPA firm to support succession planning. A CPA firm can help identify tax implications, how to minimize the tax burden for stakeholders, and how to maximize the after-tax value of your company.
Our CPA firm specializes in succession planning for small to medium-sized business owners. Once we understand your goals and objectives, we can help create a plan for business restructuring, tax planning, and retirement planning.
Contact Reynolds and Associates today to initiate a discussion about the future of your business. We want to see your business continue to grow on the foundation you built.
Complete our website form with information about your business, email us at info@reynoldsCPAfirm.com, or call us directly at 713-316-4560.
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