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Some Essentials for a Successful Business Succession.

On Behalf of | Nov 12, 2020 | business law

Business owners are wise to actively plan for the transition of business ownership from the current owner to the next. But what does this mean? Although the exact answer should be different for each business, there are some generalities that hold true across the board.

  • Identify the Next Owner:  This isn’t as obvious as it might seem.  While many family business owners might expect their business to be passed to the next generation, their children and grandchildren might have different ideas.  The next owner might be a family member, but it might also be an employee, a competitor or a customer.  Cast a broad look to see who might be the best fit for your business.
  • Slow transition: The current CEO and management may want to continue to serve while the future CEO and management are getting to know the business. This will provide the future management with a valuable training period.  It also allows for an introduction of new management/ownership to the customer base.
  • Transparency: Plan the transition and when the time is right, share it with your team and customers.  You can’t share your plans until they are finalized and old and new management and ownership are fully committed to it.  However, once that is the case, sharing all relevant parts of those plans with your employees, suppliers and customers is helpful.  Change is always a concern.  Assuming your plans involve keeping employees and suppliers and continuing to provide good services and products to customers, sharing them only puts minds at ease.  To the extent your plans involve a change that may be considered a negative for employees, suppliers or customers, the more out front you can be about it, the fairer it is to them and the more goodwill you are likely to retain.. Of course timing of communication always has to be planned well, but no one likes to be blindsided by the news.

These lessons can prove useful for any business looking to ease the transition from one leadership team to the next. However, it is important to note these tips are fairly general. It is often best to have a succession plan tailored for each business to better ensure the goals of the business are honored throughout the transition period.