Identifying a successor to take over your business

On Behalf of | Mar 11, 2022 | Estate Planning

If you do not plan for a successor to take over your business after you step down, your company might not survive. You may want to retire or unexpected health reasons may force you to step down as owner. If you have a person ready to take over for you, your business might endure for the next generation and perhaps longer.

Business News Daily suggests making a list of your possible successors. There are many different candidates you may choose from, and depending on your candidate’s level of experience, you might wish to prepare a training program to raise your candidate’s skill level so that he or she can be an effective business owner.

Choosing a family member

If you run a family business, your preferred candidate may be someone in your family like your spouse or an adult child. Before settling on a child to succeed, be certain that your son or daughter actually wants to run your business, as some children do not desire to follow in a parent’s footsteps. If your child is not interested, you might choose another relative like a sibling, a nephew or a niece.

Choosing an employee

Someone who works for you might be a top candidate to be your successor. If so, you may design a plan to give your candidate more responsibilities so that he or she may easily step into your role when you retire.

As an alternative, you may feel more comfortable naming multiple employees to run your business. In this case, you would have to establish the responsibilities of your candidates so they know how to run your business without getting into conflict with each other over turf.

Choosing an outside party

Some business owners decide to hand their business over to an outside party like an individual entrepreneur or another business. If you choose this route, you should be sure that the other party is financially solvent enough to buy your business. Be sure of the intentions of the other party, as some people buy businesses only for their inventory and dissolve the bought business soon after.

Composing a list of successors may be of benefit in the event one or more of them become unavailable. Having prospective successors in mind, as well as plans to prepare them for succession, may be of benefit.