Planning how to pass your business to your children when you retire in 20 years is essential. Yet you also need to consider what would happen if a truck crashed into your car tonight? Who would take over then? Do they know everything they need to know? Do they have the access they require to run the company if you are in a coma or dead?
The sooner you begin your business succession planning, the better
Hopefully, you have many years of good health left. Still, it pays to be prepared. Here are some things to think about:
- Who takes charge? Leaving the business “to my kids” could create problems. What if your eldest son with a series of failed business ventures behind them and a taste for the high life is the dominant one. Would you be happy that they assume control? Or would you rather your youngest daughter, the quiet but studious one who has proven to be a wise head on young shoulders. Make your wishes clear in a legal document.
- How will they know what to do? Let’s say you want your daughter to take over the business. She is still busy at school. She has not had the time to learn all she needs to know. Do you have a reliable support team that could give her that information? A wise counsel she can rely on?
- Who will sign things if you cannot? If no one in the company apart from you can sign checks, the company will hit problems if you cannot act. Consider creating a power of attorney so that someone can step up to keep the money moving in an emergency.
As a business owner, you need to look ahead, but you cannot predict the future. You can update your business succession plan over time. The important thing is to have one.