As a California business owner who is thinking about turning over your business to someone else, you may be trying to get your ducks in a row so that you can make the transition of ownership as seamless as possible. At the Law Firm of Lan Quoc Nguyen & Associates, we recognize that succession planning is a critical part of owning a business, and we have helped many clients accomplish this and related objectives.
According to Inc., creating a comprehensive business succession plan can help ensure that your business lives on once you are no longer a part of it, and this holds true regardless of whether you operate a family business or something else. So, what areas should you be sure to cover in your business succession plan?
There are several key elements a well-thought-out business succession plan should include, and one such element involves language that dictates when the plan will take effect. For example, maybe you plan to retire by a certain date, or maybe you want the plant to take effect once you pass on or develop a disability that prevents you from maintaining a position of leadership. Establishing a target date for the succession is an important step in the process because it will give your successor an idea of when he or she must be ready to step in and fill your shoes.
Next, you will want to determine in the succession plan exactly who you want your successor to be, and the plan should also dictate the responsibilities you expect this person to take on. You may, too, want to set clear guidelines that will help determine what the successor must do before he or she is ready to assume the leadership role. While these are some of the important areas any business succession plan should address, please note that this is not an exhaustive list of all possible inclusions. You can find more about business law on our webpage.