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Why is having a business succession plan an important part of the estate planning process?

| Nov 13, 2020 | Business Succession Planning, Estate Planning |

Life is unpredictable. It doesn’t matter how old your company is; you must engage in succession planning. If you don’t make plans now, then you could put your Colorado company’s longevity at risk.

What is business succession planning?

Leaders should be forward-thinking enough to consider what happens to their company once they’re no longer in the picture. They have to understand that they have a lot of people counting on them to keep things afloat. Business succession planning involves leaders crafting a plan for keeping their company afloat if they retire, something incapacitates them or they prematurely pass away.

An essential part of succession planning

One of the most critical steps you can take as you plan for your company’s future is to hone in on individuals who may be ideal to assume future leadership positions.

The right person may not yet hold an executive role in your company. You may want to go ahead and pull them aside to discuss their future goals, taking on more responsibilities or undergoing more cross-training necessary to run your business, though.

You may also find that no one currently working for your company is ideal for stepping in and leading your company. You may need to identify and interview individuals from outside your company to find the right fit. This process can take some time.

Succession planning can build confidence, trust

Company leaders can show potential investors, their employees, and customers just how serious they are about staying in business by engaging in succession planning. A lack of stability or forethought can make individuals hesitant to keep working for or with your company.

Selecting and training the right person to assume a leadership role with your company can take multiple years. You can grow your partners’, customers’ and employees’ confidence in your company by organically letting this transition process occur.

How to create your business’ succession plan

Your family members, employees and investors count on your business continuing to flourish long after your leadership role ends. While you may assume that a family member will step in and run your Denver business in your absence, they may not be able to do so. An attorney can help you craft a business succession plan that will hopefully keep your Colorado company afloat for generations to come.

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