Succession Planning: 4 Steps to a Lasting Legacy
According to the US Census Bureau, 90 percent of businesses in the United States are family owned. And they account for more than half of our nation’s employment. This includes farm operations, of which 97 percent are family owned, per the USDA.
Surprisingly, it’s estimated that nearly six out of ten family businesses don’t have a succession plan. Whether a two-person operation or Fortune 500 company, succession planning is a necessary strategy to avoid complicated issues and ensure long term business success.
Set Your Legacy Goals
When you launched or took control of your business or farm operation, you may have had a vision for how it would play out long-term although without specific details. But now is the time to evaluate your future with (or without) the organization, develop a tangible plan and determine how you want to leave your legacy. Are you wanting a future income for you and your spouse? Do you have a vision for the next phase of the company? Are you interested in setting up a charity or scholarship in your name or the company’s? Once you have a clearer picture of your overall plan, it’s easier to get the process underway.
Identify Key People & Positions
One critical component of succession planning is to identify key positions and potential candidates to ensure the organization is in good hands for the future. In most cases, there are a few integral positions that must be filled with the right talent to ensure a smooth transition and ongoing success. You may have talented people who don’t have the passion or passionate people who may not meet the required skills. It’s up to you and your close confidants to evaluate and determine who should be in place and in what capacity.
Along with simply identifying key people, it’s often a good idea to meet and have candid discussions about where their interests lie and what roles they see best fit their future with the company. This is particularly true for agriculture operations as some family members may be interested in carrying on the family business while others may not want to be involved long term. These conversations will be very helpful when determining who may be best suited to lead in key areas.
Create the Transition Plan
Once you’ve set the ball rolling and have an idea of who will be involved, now is the time to devise a transition plan to ensure all goes smoothly. This includes mentoring key personnel, establishing a timeline for your departure, and having a clear understanding of your responsibilities and involvement though the transition, as well as any financial aspects that need to be addressed. Working with an attorney who knows succession planning can be greatly beneficial as they will outline the entire process and ensure you’re prepared for any changes along the way.
Once completed, a succession plan can provide peace of mind and alleviate any anxiety about the company’s future while laying the groundwork for your lasting legacy.
If you’re considering a succession plan or have questions about the process, contact our office for a consultation.