Being a Maryland business owner can be rewarding, challenging and stressful at the same time. Whether you’ve been running a company for decades or have recently navigated the startup phases of what you hope will become a successful, long-term endeavor, it’s never too soon to think ahead and plan for the future. A business succession plan is a valuable tool that allows you to control who takes over your business when you’re no longer there.
When you think of retirement, what do you envision regarding the business you’ve worked so hard to establish? A business succession plan allows you to put in writing how you would like your business to transition, as well as whether it will be sold or kept running, who will be in charge, and also, whether you will pass the reins to one or more of your heirs to continue growing your family’s legacy.
Management and ownership are not the same
When executing a plan for the future of your business, it’s important to remember that ownership is separate from management, although in some cases, the same person might carry out both roles. Management refers to the person who oversees the daily function of a company; in fact, many businesses have multiple managers.
Ownership, on the other hand, refers to who has rights and control over a business, including all assets and intellectual property. If you sign a business succession plan, you can specify the person or people who will own or manage your company when you retire or after you die.
Discuss your business succession plan with your family
Legal processes, such as business succession planning or estate planning, often spark discord among family members, especially if two or more people disagree about an important issue. Discussing your succession plan with your family ahead of time ensures that everyone is aware of your plans for the future of your business.
It can also help you smooth out any wrinkles your plan might have. For instance, you might have a particular person in mind to take over management of your business, only to learn through discussion that he or she is not interested in the position.
Planning ahead enables you to train your successor
When you take time to think about your Maryland business and what you want to happen when you are no longer at the helm, it enables you to play a key role in mentoring the person or people who will take over your company down the line. Being able to share information, give advice and discuss what has worked and not worked to become successful gives your future successors a head start.
Tap into local resources to help form a solid business succession plan
You will no doubt have questions or encounter challenges as you develop a plan of succession for your business. Building a strong support network from the start can help you avoid obstacles and swiftly resolve any legal problems that may arise.
From speaking with other business owners who have created succession plans to seeking recommendations from financial advisers and legal advocates who are well-versed in Maryland business laws, you can be confident that you can create a successful exit strategy, whether you plan to sell your business or keep it in the family.