Succession planning is a huge part of the financial planning process for many people.  The reason being, there business is often their most valuable asset for themselves and their family.  If you or your family own a business there are some steps to consider when thinking about succession planning.  Many companies often don’t plan which can lead to a number of major issues.

• Identify your successors.  Sometimes children aren’t the best fit to run a business.  Make sure you choose someone with the appropriate skills.
• Bring systems and data current.  Many family run businesses run their companies the way they have been for a long time, possibly decades.  In order for the new owners to understand what is going on, who the customers are, how they are getting billed, etc. technology should be integrated.  This should also make the business run more efficiently.
• Prepare the new boss.  The new CEO should spend some quality time with the current owner to prepare him to run the business.  A helpful idea is that even if the successor is a family member they should spend time outside the firm working first.  This will allow them to gain independent and creative insight into how other companies are being run.  Hopefully the fresh perspective will help the family business come up with new ideas.
• Deal with crucial employees. One major issue with bringing in a family member to take over the company is that they may pass over other employees who have been working there for years.  Consider promoting the key employees or bringing them in as stakeholders.  You need to make sure their interests are aligned with the company and they remain happy!
• Cover your tax exposure. Having a great CPA and Estate Attorney are a huge part of succession planning.  There are many complexities involved and you want to make sure your plan is carried out in the most efficient way possible.

A great article can be found at http://www.nytimes.com/2010/03/18/business/smallbusiness/18sbiz.html

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