Many businesses in Ohio are small when compared with the nation’s major corporations and thus have different sets of issues to deal with as they try to grow and maintain a profit.
Business succession is one issue that is of special concern to family-held and other smaller businesses. Larger businesses can often carry on with relative ease when a director or key officer retires, although even they may face some struggles in the aftermath of a transition.
Planning for leadership changes in small businesses
For small businesses, though, when one person, such as the founder retires, it likely means a full-blown change in the ownership and basic operations of a business. It is therefore important for entrepreneurs to think about what approach they want to take when it comes time to pass the business along.
Many businesses have multiple owners. In such cases, the easiest solution could be for a departing member to sell their shares to a co-owner or, in other cases, back to the company. Doing so efficiently will likely require a well-drafted buy-sell agreement. The business’s legal affairs will otherwise need to be in order.
Other options for business owners to consider
Sometimes, there may not be a suitable co-owner to pass along one’s business interest. In this case, a good solution may be to identify an employee who has proven themselves capable of running the business to be the successor. Ideally, the business owner will be able to take the time to train in their successor to make the eventual succession as seamless as possible.
With the right estate planning, it may also be possible to pass the business to loved ones, if they are not directly involved in the business’s operations. In other cases, while it is a huge step, sometimes the best option may be to sell a business to a third party buyer.