Tips for successful business succession planning in Massachusetts

Massachusetts can boast almost 600,000 small businesses according to numbers reported to the Small Business Profile's Office of Advocacy for 2008. The agency notes that these businesses are a key component to the state's financial well being. The United States Small Business Administration agrees. According to a recent study released by the SBA, small businesses are "an engine of economic growth and job creation." This statement from the report, titled The Role of Small Business in Economic Development of the United States: From the End of the Korean War (1953) to the Present, also notes that small businesses must succeed for the country to grow.

But what does success in business mean? In addition to meeting or exceeding a bottom line, businesses must also look into the future. An important factor for success in the future is a strong business succession plan.

Business succession planning basics

A business succession plan accounts for the transition of a business from one owner to the next. The business could be passed to a family member or other individual the current owner deems appropriate. A variety of factors should be considered when an owner attempts to make this decision. For example, it may be wise to look within the organization for an individual that has the experience and knowledge of the business to help better ensure its success during the transition of ownership as opposed to defaulting to a family member.

Once in place, it is often wise to allow for an overlap during the transition. Providing time for a new owner to become comfortable with the position can help to better ensure the business continues to succeed after the original owner's departure.

It is important to note that finding a new owner is only one way to exit a business. A variety of options are available, including selling one's business interest.

Timeliness is an important factor when developing a plan

Like everything in business, timing counts. Some experts recommend a strong succession plan should be in place at least 15 years prior to retirement. Others note succession plans are crucial at anytime, since an owner could suffer an accident or unexpected health issue that could jeopardize the future of the business.

Regardless of the timing that a particular owner feels is best for his or her business, those who are considering a succession plan should contact an experienced corporate law attorney. This legal professional will be able to guide business owners through the various issues that can arise when developing a plan and help to better ensure the plan helps meet their goals.