Many St. Paul business owners want their companies to last beyond their lifetimes. However, if you as a company owner do not plan for a successor to take over after your retirement or death, your business might become embroiled in a succession dispute and even dismantled entirely. Knowing when to begin your business succession plan can help avoid a premature end to your company.
Ideally, business succession should start as early as possible. According to Forbes, at least ten years might be necessary to complete a succession plan. This is due to the many aspects of a business that an owner has to address. These can include, but are not limited to, liabilities, ownership interests, taxes, and voting rights for owners and stakeholders. The more complex the business, the more time succession planning will likely take.
If you wish for your child or children to take over the business after you retire or pass away, it is important to make sure your chosen successors understand how to run the business. During a longer-term succession plan, a parent can mentor children in business management and responsibility. Some business owners start their children off with non-voting shares and, if they pay off those shares, are permitted to purchase voting shares.
A mentoring period also allows owners to see if their children can make the leap to running the business. While some parents believe a son or daughter is the perfect fit to take over someday, it turns out that another sibling is actually more qualified. Also, a child may find out that running a company is not what he or she truly wants. A long succession period is a good time to help resolve these issues.
Business succession is generally not a process that proceeds quickly. You may have many questions, which a qualified business law attorney can help you answer. Since St. Paul business owners will have varying wishes for passing on their businesses to a successor, do not read this article as legal counsel. It is intended only for educational benefit.
