Top Reasons for Succession Planning for Your Business
Succession planning is an often-overlooked part of running a small business in Phoenix. Business owners are usually heavily focused on the day-to-day operations of their company and put off planning for a future where they will no longer be in charge. However, there are numerous benefits of having an effective succession plan in place. Below are four of the top reasons for business succession planning in Phoenix, Arizona.
- Create a Stable and Smooth Transition
A succession plan will ensure the success and legacy of your business when you retire or are forced aside for any reason. The transition period to new ownership is a vulnerable time for a business. Having a plan in place will ensure that there is a smooth hand-off.
Additionally, it gives you the control to decide how the business will continue to run in your absence. You have the opportunity to create a role for yourself to continue working as the transition is happening. If you decide that you want to sell your business, it allows you the time to ensure that the financials tell a story that the buyer will understand. Many times, businesses work to minimize profits and maximize deductions to limit tax exposure. This strategy negatively can affect the valuation of the company if you are planning to sell.
- Avoid Future Conflicts
Having a succession plan in place can help avoid fighting when there is a change in leadership. This is particularly important for family businesses. During a transition in leadership, especially if it is unexpected, emotions can run high. There is a greater chance of hurt feelings and estrangement if there is no plan in place. A succession plan puts everyone on the same page and makes your intentions clear.
Planning also gives you the opportunity to include important staff members in the conversion. By having discussions early, you can build a pattern of healthy and cooperative decision-making in the business.
- Help Your Business Survive Unforeseen Events
Your retirement date is typically planned. Usually, you will know months if not years in advance when you will retire. However, tragedies can happen unexpectedly. A sudden health issue, family emergency, unexpected death, or arrest could cause you to leave the business abruptly. Many businesses do not survive the unexpected loss of a business owner. Your heirs may be forced to sell the company under duress, or with no plan in place, the business may end up directionless and fail over time.
If you have a plan for what needs to happen when a tragedy occurs, you will never be caught off-guard. You can have peace of mind that your business will survive unforeseen events.
- Promote Training and Development
Succession planning does not only help your business in the future, but it also benefits your business in the present. It helps business owners think about the long-term success of their company, which includes a focus on the training and development of staff. Employees will be motivated to give their best effort if they know that the business is interested in their future. It can help to improve the engagement and retention of your employees.
Effective succession planning ensures that there are qualified internal candidates to fill management vacancies as they arise. If capable candidates are already identified and trained, the company will not have to spend the time and money finding and training a replacement. It also gives you the flexibility to identify someone with potential, even if they do not have the necessary training at the time.
How Can a Business Planning Attorney Help?
A Phoenix business attorney will have the tools and know-how to develop a plan that helps you achieve your goals. They will ensure that the proper documentation is in place and nothing is falling through the cracks. Working with an expert attorney, the process will not be complicated or time-consuming.
Succession planning involves complicated tax, estate, and other legal issues. Failing to address these topics properly can lead to significant problems for your heirs and your business. When you work with a qualified attorney, you will know that your business is prepared for whatever the future may hold.
Your Phoenix Business Planning Attorney
If you are interested in succession planning, you should reach out to a local business planning attorney. It is never too early to start planning for the future. Nicole Pavlik is an experienced business planning attorney based in Phoenix, Arizona. Call Nicole Pavlik Law Firm today at 602-635-6176 to schedule a free consultation and discuss your business planning needs.