A lot of business owners think of succession planning as something you do when you’re ready to retire—something you’ll get around to eventually. But in reality, the need to plan often shows up before you’re expecting it.
Someone gets sick. A partner decides to leave. A deal comes in out of the blue. Life doesn’t always give you a six-month runway. And when there’s no plan in place, what was once a successful operation can become a scramble.
Succession planning isn’t just about naming your replacement. It’s about making sure the right people have the right tools at the right time. Who has the authority to sign contracts if you’re not available? How will your ownership be transferred—through a will, a trust, a buy-sell agreement? What if there are multiple partners or heirs?
If your business is co-owned, a buy-sell agreement is usually the first step. It lays out what happens if one owner retires, becomes disabled, or passes away. Who can buy in? How is the business valued? What happens if no one wants to continue? These questions don’t get easier with time—they get harder, especially if emotions are running high.
If your business is family-owned, planning can get personal. You may have children involved in the company—and others who aren’t. Some want to run it. Some don’t. Equal doesn’t always mean fair, and a lack of clarity can create resentment that carries on for years. A succession plan gives you a chance to set expectations early and document your intentions clearly.
From a legal standpoint, it’s important to make sure your estate planning documents and business documents match up. Your will might name your spouse as your beneficiary, but does your operating agreement say the same? Are there life insurance policies tied to the business? Is there enough liquidity to keep things running if ownership changes hands?
One thing many people overlook is what happens if you’re temporarily unavailable. You don’t need to be retiring—or even seriously ill—for succession planning to matter. A short-term disability, a family emergency, or even an extended vacation can create problems if no one else is authorized to make decisions in your absence.
Planning now doesn’t lock you into anything permanent. It gives you flexibility. You can revise your documents as the business evolves. But having a basic framework in place means fewer surprises—and fewer disruptions—when the unexpected happens.
You don’t have to be ready to step away to start thinking about who comes next. In fact, that’s often the best time to start.
