Why you need a succession plan for your self-employed business

You might decide to step away from your business for a variety of different reasons, but ultimately it will either mean selling up, or finding someone else to manage the company on a daily basis. So, it’s worth understanding what both options might involve.

If you’re looking to pass on the management, and potentially ownership, to someone, then you need to think about likely candidates. If you’re thinking about friends or family taking over, it’s important to understand whether that’s something they’re actually interested in doing. And the same applies to partners or staff. 

It’s also a good idea to discuss your business strategy, and find out whether your appointed successor will continue running your company in a way that aligns with your vision and values. If you’re retaining full or part ownership, you don’t want to be arguing with your successor about every decision. 

Succession planning in advance also gives you time to consider different options. For example, if you want to split the company between multiple children, you can put a shareholder’s agreement in place. And this allows your offspring to understand the decision and make their own plans for the future. It’s a good idea to speak to a solicitor early in the process to ensure everything goes smoothly.

Selling your business is potentially easier, but you still need to ensure that everything is in order. This can be a big advantage if you receive an unexpected offer earlier than planned, and it’s too good to pass up. This includes considering any restrictions the new owner may want to place on you, for example preventing you from starting a new competitor to the existing business. And any indemnities you want against any legal action after the sale.