Not many people in California are thinking about their business needs when it comes to estate planning. However, creating a succession plan can save your business time and money down the line.
Small business succession planning is when you, as the owner, identify talented employees that can take over or be promoted when one of your more experienced employees leave for whatever reason. If you have older employees or are getting older, it’s also very necessary to have a business succession plan for your small business.
How do I create a business succession plan?
A business succession plan requires that you know the ins and outs of your business as well as all its potential staffing needs. For example, you need to identify the ideal number of employees for your business to run successfully while still making ends meet.
Ideally, you’ll be hiring more than what you need just in case of callouts or sudden departures. Over time, you’ll identify the individuals who actually care about the business and do a good job, and these are the employees that could one day be management material.
What do I do once I’ve identified these employees?
Once you’ve identified the employees that could move up in time, you’ll want to communicate this with them. Having people in mind for manager roles or roles with more responsibilities does a few things for your business, such as:
- Keep your employees motivated and happy, knowing that there’s a promotion for them in the future
- Reduce recruitment costs since you’ll never have to recruit for higher up positions
- Reduce downtime when a manager or other employee leaves
As part of your estate and legacy planning, you may want to start training these promising employees early for the position and bring in a lawyer to discuss the financial details.