Succession Planning for Small and Mid-Size Businesses
Small business can arise out of necessity, such as in response to redundancy, or a desire for greater flexibility and control over work. In other instances, starting a small business grows from an aspiration to turn passions into products or services that offer a sense of achievement and act as a lasting legacy.
For small and medium-sized businesses, this final aspect is vital. While larger-scale companies may have a team of dedicated staff on hand to assist with financial matters, it often falls to the owner of small businesses to deal with estate planning. If left too late this could result in hasty, unsuccessful transitions and potentially wasting years of hard work and dedication.
The Importance of Small Business Succession Planning
For businesses of all sizes, estate planning in the UK (specifically succession planning) offers peace of mind for business owners so that following retirement, exit or in the event of death or incapacitation the business is dealt with in accordance with their wishes.
A clear succession plan also helps to avoid excessive debts and taxes, outlines the future of the business (including closure) and defines a successor to the business, whether that be a current partner, family member or external stakeholder.
Having a plan in place also demonstrates proactivity, strengthening confidence in clients and employees while potentially also helping ease the burden of stress on yourself and others during times of crisis.
The Risks of Not Planning Your Small Business Estate
Besides a lack of preparedness, failure to complete a succession plan in good time can result in a number of related issues, such as:
- Failure to explore alternative options: Narrowing focus to family members without exploring other avenues means limited options when it comes to finding a suitable candidate for the future ownership. In the interests of safeguarding your business, all avenues should be thoroughly explored.
- Lack of successor development: To facilitate a smooth transition process, it is vital that any information or knowledge relevant to the running of the business be shared with internal candidates, rather than sole reliance on the owner, which in their absence could lead to significant disruption in addition to difficulty with leadership and cultural shifts.
- Poor communication: Estate planning can be a difficult topic to broach for many people, since it bridges the gap between work-related logistics and the more emotional implications of a potential illness or even death. Resisting or avoiding these topics can result in problems later on, which is why it’s important to know how to have an open, clear and structured conversation regarding the wishes for your business. A trusted estate planning service can help with this aspect of the planning process, offering guidance while helping to make sure everything stays on track.
Support to Help You Plan
Estate planning can be a complex and emotionally involved process, which is why getting support is essential. In addition to help from an estate planning professional, some prior research into estate planning can be found online.
Alternatively, speaking to those who have exited their own business in order to retire or move onto alternative ventures can be especially beneficial. Once you know your options, a plan can then be made so that your legacy will be protected and your business will continue to flourish.
