Most contractors involved in the day-to-day of their construction business don't have a lot of time to consider what their company will be like in 5 to 10 years. Succession planning - which may be even farther down the road - often doesn't get the appropriate amount of thought either.
Whether retirement is in the near or far picture, creating a good succession plan is essential for you and your business. Elaine Ervin, National Construction Practice Leader, and Dan Gaffney, National Wealth Services Practice Leader, Moss Adams LLP, say there are five key elements to succession planning, and each should be considered in order to protect your business and personal wealth.
- Business financial planning
- Personal financial planning
- Management succession planning
- Estate planning
- Ownership transition planning
In addition to considering each of these elements in your business succession plan, Ervin and Gaffney also suggest contractors ask themselves the following questions:
- Do you know your exit alternatives?
- If something happened tomorrow and you could no longer lead the company, who would?
- How will your management team execute your strategic plan effectively in your absence?
- How have you prepared your successors to fulfill your role in the business?
- When and how will you introduce your creditors to your successors?
Have you taken time to consider your succession plan? If so, did you address the elements mentioned above? If not, it might be time to take a second look at your succession plan.
In Ervin and Gaffney's article "A Blueprint for your Business," they take a more in-depth look at why a succession plan is one of the most important elements you'll create for your business. Perhaps the most important tip from the article is to develop a succession plan that takes uncertainty into account.
Whether you're planning to gift or pass on your business to family or to sell it and completely remove yourself, Ervin and Gaffney's article offers lots of tips and considerations all construction contractors should start planning for now in order to make retirement a smoother transition.