Owning a business often means that you have to do more work than your peers who have employment arrangements with a company. It also means you will have special considerations when creating an estate plan that many other adults won’t have to worry about.
Most business owners understand that they need to arrange for someone to inherit or take over the company that they have built, but fewer people consider the need for succession planning when creating an estate plan or for the overall stability of the business.
What does a succession plan do?
As a business owner, executive or manager, you fill multiple roles at the company every day. You know the logins for all of your various accounts online and what needs to happen for the smooth completion of daily operations, like when certain deliveries come and when different bills are due.
If something were to happen to you, like a car accident that leaves you unable to go to the office or even help someone perform your job by providing them with passwords and other critical information, the company could suffer substantially as a result of your inability to work. A succession plan ensures that the information about your daily tasks is accessible and understandable for someone who might have to fulfill your job for you.
From a list of important contacts to the information about every website that you use as part of your business operations, a strong succession plan should take someone step by step through each of your obligations and all of the information about the business that only you know.
Why succession plans are important
Obviously, when you reach the age where you want to retire, you will start making plans to train the person who will step into your position. However, no one really knows what the future holds for them. Medical events, accidents and other unexpected situations could mean that your business is left at a standstill with no one able to pay the bills or access documents and accounts.
By the time you are able to return to work, the company could be in a serious financial mess. Employees may have quit, and supplies may have spoiled or gone to waste, to say nothing of the impact of weeks of unpaid bills.
When you create a succession plan for your role and any other managerial or executive roles at your company, you help ensure the continuation of business regardless of what happens to one individual on staff.