- Intangible Assets
- Tax consequences
- Community Banks
- Dodd-Frank Act
- SEC Crowdfunding Rules
- Judgment creditors
- Municipal Liability
- Consumer Debts
- Employment Law
- Small Business
- Equity Development
- Business Entities
- Corporate and Business Tax
- Mergers and Acquisitions
- Business Formation and Planning
- Closely Held Businesses
- Sales and Dissolutions
Problems and solutions in business succession planning, P.1
As we’ve previously mentioned on this blog, business succession planning is critical in maintaining the strength and integrity of a business during and after changes of leadership. Experts in business planning say that businesses must start early to ensure they put together an intelligent strategy for succession.
Unfortunately, this message doesn’t translate well, and many business owners fail to form a plan and take action in time and in the way they should. Although there are a variety of potential issues we could discuss, a recent article in Entrepreneur mentioned several common mistakes business owners make in this area. We want to look at one of them in this post.
One common mistake business owners make in the area of succession planning is to assume that a successor must match the previous owner in terms of skills, experience, leadership style and other qualifications. There isn’t necessarily anything wrong with this, if that is truly what the business needs to succeed. A better way to approach the selection of a successor, though, is to look at what kinds of skills and experience, and what kind of leadership style, the company needs in a successor in order to stay competitive in the industry. Succession planning should look to the way the market is changing and adapt the that rather than remain stuck in a model that may have worked in the past but isn’t as relevant now.
Selecting the right successor doesn’t just happen, though, and it is important for businesses to put themselves in a position to have a healthy selection of successors in their arsenal. Businesses can do this by coming up with policies which ensure the recruitment and cultivation of trustworthy candidates within the company. This is a process that can take time, and that is why it is important for businesses to begin planning for and implementing their plan earlier rather than later.
In a future post, we’ll continue this discussion.
Source: Entrepreneur.com, “Skirt Roadblocks to Succession Planning,” Beth Miller, Jan. 12, 2015.