- SEC Crowdfunding Rules
- Judgment creditors
- Municipal Liability
- Consumer Debts
- Employment Law
- Small Business
- Equity Development
- Business Entities
- Sales and Dissolutions
- Mergers and Acquisitions
- Closely Held Businesses
- Business Formation and Planning
- Corporate and Business Tax
Problems and solutions in business succession planning, P.2
planning their exit from the company. We’ve already briefly discussed the importance of planning for a fitting successor, emphasizing that it is important to begin this process sooner rather than later.
Another common problem is when a business owner has trouble giving up control of the business. What we proposing here is that it is time—whether by design or by necessity—for a business owner to step down or bow out of that role, and he or she refuses to actually bow out. This can take various forms, but generally involves a failure to allow a successor to fully take over their new role.
There are a variety of ways to address this problem, and the most effective ones will involve planning in advance by setting up a defined process by which the previous owner can map out how the transition will work. It doesn’t necessarily have to involve immediate and complete giving up of control—it often doesn’t—but it should be clear that there is a process in place, a roadmap, so to speak. If the transition plan is left up in the air, there is the risk that a successor may become frustrated by perceived meddling or that the previous owner practically steps back into his or her previous role. The result could be failure to make a planned transition and instability for the company.
We’ve only discussed here a couple common problems in succession planning and suggested general ways to addressed problems. To repeat: in succession planning, the most important thing is to get started well in advance and to put a process in place so that succession is not a matter of groping in the dark. Having established timelines and goals can really help make the transition process more smooth and ensure a company’s future success when an owner moves on to a new stage of life.
Source: Entrepreneur.com, “Skirt Roadblocks to Succession Planning,” Beth Miller, Jan. 12, 2015.