What Is a Succession Plan and Why Do You Need One?

What Is a Succession Plan and Why Do You Need One?

Published: September 01, 2022

What Is Succession Planning?

A succession plan is essentially an “exit plan” for your business that you can implement when you retire, or in the event that you die or become disabled or divorced. In short, it’s a roadmap for what will happen to your business when you are no longer able to run it. Although you may not relish dwelling on that thought, succession planning is important for the overall security of your life’s work. There are four main succession options for entrepreneurs to choose from:

  • Pass your business on to a family heir or heirs
  • Sell your business to your business partner
  • Sell your business to an important employee
  • Sell your business to an outside company

 

Which option you choose will depend on your individual situation, so the first step in the succession planning process is to consider your options and do some research on each. If possible, you should talk to entrepreneurs who have already gone through the process so you can learn about their experience and glean some practical tips.

Why You Need a Succession Plan

There are plenty of reasons to create a succession plan; arguably the biggest one is to achieve peace of mind for you, your family, your business partner (if applicable), and key employees. Much as creating a will does, forming a succession plan can help to minimize the uncertainties that can arise with major foreseen and unforeseen events. This in turn will minimize any related negative impacts on your business and employees. Here are more benefits of planning for the future of your business:

  • Helping your business navigate an unexpected event
  • Identifying key leaders and operators of your business who will be pivotal in taking it over
  • Saving money on the costs associated with hiring new leaders and employees by not having to find them on an emergency basis
  • Facilitating forward-thinking conversations across multiple departments in your business
  • Motivating employees by showing that you have given thought to their futures with the company

Create a Solid Succession Plan With Next Level Northwest

Enrolling in a business accelerator program and working one-on-one with a business coach is an excellent way for entrepreneurs to learn about succession planning. If you own a small business in the Northwest Chicagoland area and are ready to accelerate your business growth with coaching, consider applying for admission to our business accelerator program with Next Level Northwest.  

Next Level Northwest is a business acceleration public-private partnership serving the Northwest Chicagoland region. We support regional and local businesses through collaborative and innovative initiatives to help grow the economy. Download our Program Overview PDF here

Ready to take your business success to the next level and become a Next Level Northwest graduate? Download and prepare your application following this process today!