Communication Can Be the Key to Succession Planning in Businesses

A recent study of small businesses in the United States by U.S. Bank presented some troubling statistics when it came to small business succession.

More than half of all small businesses in the United States are owned by individuals over 55 years old, and the vast majority of business owners want to retire by the time they turn 65.

But they aren’t ready. 

Overall, nearly 80 percent of business owners have started thinking about succession planning, but they aren’t taking action. Instead, almost half of all business owners don’t have a plan yet.

And they are struggling to put one together. 

“Owners may want help navigating the succession planning process, as nearly two-thirds (62%) find the process of succession planning overwhelming. Well over half (56%) worry they won’t get a reasonable price for their business when it’s time to sell, and roughly half (53%) say they lack the proper resources or guidance to plan for the future of their business,” the report says.

These are obstacles that must be overcome, as only 40 percent of businesses survive after the founder leaves the company.  

Frankly, it is not that difficult to develop a plan for succession in a business, as long as those involved have open communication with each other to share their goals and hopes for the company. Having this type of communication will help guide a legal and financial team to put the plan in place. 

The attorneys at The Orlando Law Group specialize in helping businesses structure their succession planning in Orlando, Sanford, Winter Garden and Kissimmee and are here to help set up the tools and programs that can keep your company running for generations.

What is the future of the company? 

The first step of any succession plan is to decide what the future of the company could be and if a child really would like to take over the family business.

After all, a child may not enjoy the family business. They may want to pursue something else. And if that’s the case, succession planning for a business will look completely different. 

For this article, we’ll assume that the child wants to take over the family business when the parent retires.

With that, it is time to discuss each other’s goals.

Does the child want to expand or try to franchise? Did the parent set a goal of taking the company public? Perhaps the parent wanted to reward the employees by creating more of a corporation where long-term employees received shares of the business. Or is everyone satisfied with remaining a small business that has one location and provides for everyone in the family?

Knowing these answers and coming to an agreement on that direction will help guide how a succession plan will take place over the coming years. 

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