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Steps to take in business succession planning

| Sep 18, 2020 | Business Law |

Small business owners in Palos Verdes Estates understand that they will eventually want to retire, or they could even pass away before retirement. However, they may worry about what will happen to their business when that time comes. This is where business succession planning comes into play.

There are four general steps a small business owner can take when it comes to succession planning. First is to choose a successor. A successor can be a current employee or in the case of a family business, a relative. It can help to enlist the aid an impartial third-party consultant, to avoid unintentional favoritism.

Second, develop a formal training program. Ensure your successor understands the critical functions of your business and give your successor experience in these functions. This way the successor can understand the extent of operations of your business.

Third, decide on how and when you will pass control of your business over to your successor. The transition phase can be a time to ease your successor into their new role in your business.

Fourth, prepare for your retirement. What do you want your retirement to look like? Planning for your life as a retiree can make it easier for you to transition from your role in your business to your life once this role ends and your successor takes your place.

These are four steps to take before handing your business over to your successor. However, this post is for informational purposes only and does not constitute legal advice. Small business owners in California looking to execute a succession plan will want to seek the assistance of a professional to ensure their plan is legally sound, so the transition is easier when the time comes.