There are many ways in which companies of all sizes should try to position themselves for the proper amount of success going forward, and making sure they're all planned out well in advance is often a good idea for entrepreneurs to undertake. However, it seems that this simply doesn't happen as often as it should, and as such these companies might be a little bit more at risk for problems than their proprietors might think.
In addition to having business plans that create designs for how companies can grow over the next six months, one year, or five years, small business owners might also need to draw up firm ideas for what is going to happen with their companies if they were no longer able to work, according to a report from CNBC. The fact of the matter is that most smaller firms simply do not have succession plans in place and that could put them in serious legal binds were something to happen to the original owner.
"A succession plan helps to ensure the orderly transfer of a business from the current owners and founders to the next generation," Richard Kahler, a certified financial planner and president of Kahler Financial Group, told the news network. "A business owner should consider having a succession plan if monetizing their investment and the continuation of the business are important, although it's not a given that these issues are important to every owner."
Why don't people do it?
There are many reasons why owners might not have taken the time to create concrete succession plans, such as not having the time to do it with so many other things on their plates, the report said. However, others don't do it simply because it doesn't occur to them. If they're never planning to retire, they might think there's no point in devoting time to creating such legal documents, but that doesn't take into account that accidents can happen, or the fact that businesses can simply outlast a person's lifetime. Therefore, taking the time to come up with some plans is often vital for the long-term success of any company.
Another way in which owners can improve their companies' standings is by trying to reduce the costs they face every year. That might include small business insurance premiums, such as those for liability insurance, which can add up to thousands of dollars per year.