The Time for Succession Planning is Now

The busiest, most successful business owners recognize the importance of having a business succession plan. But long hours can keep owners from conducting periodic reviews of the plan to help ensure it continues to address succession goals, both operational and financial. Here are some items to review that you might not readily think of.


Multigenerational family ownership is not necessarily the cure for an operational succession plan. Emotions aside, start by analyzing key employees/positions and how a disruption, such as the potential loss or unavailability of current vital employees, would affect the business. Develop a strategy defining the roles to be assumed by second or third-generation ownership, and provide training.

Also review facilities and consider how the business would operate if one or more of your current locations or critical systems become unavailable. Review the business’s current mechanisms to protect, secure, back up, and, if necessary, replicate critical data systems, infrastructure, and applications. Technological change is constant.


While you probably have a general sense of the value of your businesses, scheduling an independent appraisal will enable you to know the value. And, of course, you should review any insurance, cross-purchase, entity-purchase, or other agreements in place for transferring business assets to family or partners.

If you have any personal guarantees on business loans, the issue needs to be resolved with lenders before there’s a problem. In a worst-case scenario, these loans could get called shortly after a majority owner/operator passes away. That could be a significant hardship for a business trying to succeed with a prearranged financial succession plan.

Your strategy should also include how any business real estate will be handled. Will it remain with the heirs, go to partners, or will new owners also buy the real estate? A formal valuation of real property generally should be made and updated every five years or whenever there’s a material change in facts or circumstances.