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How soon should you prepare for business succession?

Opening your own business is a testament to your hard work and determination. Naturally, many small business owners start a company because they want financial security for themselves and their families. That is part of why it is so disheartening to learn as many as eight out of every 10 businesses fail within the first 18 months in the United States. 

Even if your business moves past the first 18 months, there is still the matter of one day transitioning ownership or selling shares or otherwise exiting the business. And many business owners want their children to one day take over the company. This begs the question: When should you begin preparing your children for this role?

Right away is a good time

Really, you should have an idea of who you want to take over the business within the initial business plan. This may sound extreme, but by preparing as soon as possible, you know exactly where you need to take your business. Of course, your goal is to develop the company on your own, so your kids will pick it up on good footing. 

You may not want to think about this possibility, but you never know when you will need to step away from the business. You may think you have decades to look over things only to come down with an illness that forces you to take a step back. Having some kind of plan for transferring ownership will really help in these kinds of trying times.

Get your children involved soon

Try to maintain an open dialogue about who you want to take over the business. This is especially important if you have more than one child. Consider who will be the best fit for the job or which aspects of the business would be handled best by whom. In fact, you should tell your children of your desire to have them take over the business as early as their high school years. This gives your kids plenty of time to decide what they want to do with their lives. They can go to college and still get plenty of life experiences only to come back and run your business later.

For more on these matters, please see our overview of elder law and business succession.

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