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5 Costly Business Succession Planning Mistakes to Avoid

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Business succession planning can be pivotal to protecting your investment in an enterprise and ensuring the longevity of that enterprise. While there is no cookie-cutter way to plan for the succession of a business, however, avoiding the following mistakes can be key leaving a business on your terms and minimizing your liabilities in the process.

Don’t Make These Business Succession Planning Mistakes

  1. Assuming a family member will take over the business – Although family members may have helped start or run a business, they may not be willing to assume a leadership role when an owner is ready to retire. And making this assumption without speaking to family members can create extra stresses and complications in the succession process, especially if the selected successor is already committed to pursuing other professional endeavors.
  2. Selecting an unqualified successor – Depending on the nature and size of a business, the right successor to take the helm may need to be someone with managerial, business or other experience. If, however, the business is left to someone who is not qualified to run it, the chances are that the business will not remain successful or profitable for as long as it could had a qualified successor been chosen.
  3. Not sharing the plan with heirs or successors – Although business succession planning may cause some competition and conflict, discussing the plan – especially with those who may be successors – is critical, as this can help identify some extra plans that may need to be made now to avoid additional pitfalls or complications in the future.
  4. Waiting too long to start the planning process – Business succession planning is a process that, in some cases, can take years to finalize. In fact, it’s generally advised that business owners start thinking about succession planning about 5 to 10 years before they plan on retiring. Waiting too long can force owners to compromise their plans. It could also come at an added expense, especially if an accident, illness or some other event forces a quick sale of the enterprise.
  5. Developing a plan without the guidance of an attorney – This  may be the single biggest mistake that can be made in business succession  planning, as not working with a lawyer can significantly increase the chances of costly oversights, especially when it comes to tax issues, the sale of the business, etc.

Contact Denver Business Lawyer Thomas E. Downey

For experienced assistance with business succession planning, contact Denver Business Lawyer Thomas E. Downey.

For well over three decades, Thomas Downey and the other legal professionals at Downey & Associates, PC, have been providing individuals and businesses with the highest level of legal service for their litigation, business, property tax and real estate legal issues.

To learn more about our various services and how we can assist you, call us at (303) 813-1111 or email us using the contact form on this page. From our law offices in Centennial, we serve clients throughout Colorado and the U.S.

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