It’s going to happen eventually. It happens to every business owner, from Bill Gates to Mark Zuckerberg to the lady who owns the restaurant on the corner. One day you will no longer be working for your business. The important question is “will your business still be working for you?” The answer to that question depends heavily on how well you have planned for transition.

You might be surprised to learn that most business owners are underprepared for the succession of their business. Many are so busy building and running their business that what happens to the business after they leave is low on their priority list. Are you one of these business owners? So caught up in day-to-day operations that your exit strategy is virtually non-existent? If you are, while you are certainly not alone, you may be placing the value of what you have built at unnecessary risk. If you want to ensure that what you have built continues to bring value to your heirs, employees, customers and the community, you had better have a plan for succession.

Many business owners believe they have plenty of time to plan for the succession of their business. They hope that when the time comes to retire they will simply hand over the company to a family member, or if worst comes to worst, they will sell the business for nice payout, pack up their things and sail off into the sunset. Every once in a while things work out just as you hope. But every once in a while is not the set of odds you should be playing with your business. If you fail to plan for succession, you could end up getting far less than your business is worth or even worse – you could leave a business with a leadership vacuum that threatens its ongoing success.

What should you be doing to create a succession plan for your business? Here are four steps that will help your succession plan move from “hoping” to “knowing.”

1. Establish your goals and priorities

Before you can create the right plan for your business, you first need to understand your goals and priorities. You should start your succession planning by developing a vision for the future of your business and your family. Determine the importance of continuing family involvement and continued independence. Establish personal retirement goals and estate objectives. Knowing your objectives for your business and your family will allow you to build a great succession plan.

2. Prepare for the planned and the unplanned

Once you have a strong understanding of your goals, both short and long-term, you will need to prepare for both planned and unexpected transition. For transition upon retirement, your alternatives may include the sale of your business, the handover of your business to family members or even the sale of your business to employees. If a sale is your ultimate objective, your succession plan may be built around maximizing organizational value up to and through the sales process. If business continuation is your priority, your succession plan may require the development of your heirs and your organization to handle a smooth and successful leadership transition. If your family is at the center of your transition plan, you will want to identify and establish a process for involving family members in decision making. Be very clear about your plan – documenting it and ensuring that it has been legally established. Communicate your succession plan to all stakeholders – including family, non-family management and others in the organization.

Planning for the unexpected can be even more complicated. A sudden need for change could alter both your strategy and objectives. If you have partners, you may not want new ones, especially with heirs of former partners. A buyout funded by a life insurance policy is often a good idea – along with an agreed upon method for valuation of the business. Having a plan for the unexpected will prevent potential problems down the road that could threaten both the business and the value you or your family will receive. If you don’t have partners, your plan may be more complex. You may need non-family management to run the business for a period of time, or they may need a policy that would fund a purchase of the business from your heirs. There are many alternatives for unexpected transition. The right plan for you will be driven by your specific goals and situation.

3. Put your plan into action

Once your strategy has been created, don’t stop there. There is nothing more useless than an unexecuted strategy. It is critical that your succession plan be put into action. Putting your plan into action may require the assistance of several outside advisors. Your accountant can help you plan for maximizing organizational value, determining a method for the valuation of your business and for minimization of tax liability upon transfer of ownership. Lawyers can help ensure that your intended successors do not face uncertainty or challenges from other stakeholders, and insurance agents can help you fund any buyouts that your plan may include.

Implementing your plan will likely require an interdisciplinary team involving key people from both inside and outside of your organization. Putting this team together and coordinating their activities will play an important role in ensuring the successful execution of your strategy.

4. Review and update your plan frequently

If creating a succession plan is your first priority, updating your plan on a regular basis should be a close second. An updated plan is generally a good plan, while an old plan may be worse than no plan at all. Goals and situations change, family members and management come and go, and the value of your organization could change significantly. To keep your plan updated, you should lean on your advisors, whether accountants or attorneys, to help you recognize life and business events that would necessitate a change in your succession plan.

Are you ready for succession? If you didn’t just say “yes” out loud with confidence, now is probably the right time to visit or revisit your succession plan. Our team brings experience to facilitating the planning process – beginning with establishing goals and carrying through to assembling your team and ensuring the execution of the right plan at the right time. Call us today to start a conversation about your succession goals.