How to Create a Successful Succession Plan by Mark Gordon

A fundamental element for strong succession, says Sarasota business attorney Jo Ann Koontz, is to plan for it, early and often.

“Lack of planning at the start will leave you with potholes later,” says Koontz, a dual attorney/CPA who runs a 10-person law firm.

Succession planning should start so early Koontz advises her clients to do it the first day of a new business — counsel usually ignored. “You don’t want to die without a will, and you shouldn’t run a business without a succession plan,” she says. “But most people don’t want to take the time to do it. They don’t want to deal with immortality.”

A good succession plan isn’t just identifying which child will run the business. For succession to work, says Koontz, a business owner has to foster an environment where someone else can take over the company with minimal disruption.

That goes from an employee who has been there for years to a new owner. To create that environment, Koontz suggests clients keep detailed up-to-date records, on everything from customer lists to vendors to software systems. That especially includes the little things in the owner’s head, the stuff no one else knows about. Lack of detailed information there, says Koontz, can derail a succession strategy. 

The next step is to determine the particulars, from who gets shares to how the company is valued. With a plan in place, a business owner should meet with an attorney and insurance professional at least once a year to make sure it’s in good shape.

A final key point to a good succession plan: Maintain the discipline to stick to it. “Have it in writing,” says Koontz, “and actually follow it.”

— Mark Gordon

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