You may spend years building a business without giving much thought to what will happen when you eventually step away. Even if that transition feels far off, waiting until it becomes urgent can leave you with fewer options and less time to prepare. The right time to think about succession often depends on what is happening in your business and your own circumstances.
Here are some situations that can signal that it is time to start planning.
Approaching retirement
If retirement is on your horizon, start succession planning before you set a firm departure date. Giving yourself time to prepare lets you consider how you want the business to continue and gives others time to adjust to the eventual change in ownership or leadership.
Heavy reliance on one owner
A business that depends heavily on one owner’s knowledge, relationships or decisions should consider succession planning even when the owner has no plans to leave. If customers, employees or important operations rely on one person, the business could struggle if that person suddenly cannot run it. Identifying this dependence early gives you time to reduce that risk.
Family or key employees taking over
If you expect a family member or an important employee to eventually take over, begin planning before the transition gets close. An early start gives you time to prepare the business and the person who may assume greater responsibility, rather than trying to make the change while managing day-to-day operations.
The possibility of death or incapacity
The possibility that you could die or become unable to manage the business for any reason makes advance planning worthwhile. An accident, serious illness or another unexpected event could leave others responsible for decisions without knowing what you intended.
In New York, your estate plan and related legal tools can provide direction about who should manage or take over your business if you become incapacitated or die. Coordinating those with your succession plan can strengthen your overall approach and help avoid uncertainty during a transition.
Considering a future sale
If you expect to sell the business someday, consider succession planning before you put it on the market. Thinking about the eventual ownership change early gives you more time to prepare the business for that transition and decide what you want from it.
Plan before the transition is urgent
Retirement, dependence on one owner, a potential successor, unexpected incapacity or a future sale can all signal that it is time to start planning. If any of these circumstances apply to you, reviewing your succession plans and business documents with an attorney can help you address potential gaps before they become urgent problems.