A succession plan is a must for a business of any size. That includes family businesses in Colorado. Look at it this way: as much as any entrepreneur enjoys control, it’s also important to think about your legacy. Without a succession plan in place, the company you’ve worked so hard to build may start to fall apart. Of course, it’s important to be discreet when making a succession plan. But it is crucial to let a few key people know about it.
Who should know about the succession plan?
Having a succession plan for a company is almost like the business law equivalent of an estate plan for an individual. A succession plan outlines what will happen to the business if you as the founder and owner are no longer able to run it. A version of the succession plan could also go into effect on a temporary basis. For example, if you need to have surgery, your chosen successor might be the person to make decisions on the days you’re out of the office.
The process of choosing a successor should involve input from others. You may consider consulting professionals who work with your business, like attorneys and financial advisers. They may have some input. You may want to develop a formal way to assess the skills of your chosen candidates.
You’ll also need to talk to potential successors and see how they feel about possibly taking on your role one day. It’s possible that not all of them will be interested. That can be true even if they’re a member of the family. Not everyone shares the same goals, even within the same family.
Once you’ve selected your successor, be prepared to invest in them. Help them assemble the skills they’ll need to be effective in the position. Also, be prepared to possibly lose some of the candidates you didn’t select. They may feel like they want to pursue a position with a better chance of promotion elsewhere.