The future is uncertain. People never know when they might have a health issue or experience a car crash. Many adults with families decide to put together estate plans specifically because they worry about vulnerable loved ones. An estate plan helps ensure that dependent family members receive proper support and have access to someone’s resources after their death.
Some people have obligations beyond just their immediate family to consider. Those who run businesses or professional practices likely have a thriving company and numerous employees to consider as well. What might happen to an organization when an owner or executive has some kind of personal emergency?
Businesses can crumble without leadership
If the owner of a small professional practice or the executive running a successful company gets into a major car crash, the business they run might suffer. Some employees might quit because they are uncertain about the future. There may not be anyone with the knowledge and authority necessary to manage daily operations until the leader recovers. By that point, the company might have become insolvent.
Succession planning is crucial for the protection of a business in the event of an emergency that affects someone in a leadership role. A succession plan helps identify specific candidates to fill someone’s position or unique qualities that could make someone capable of taking over a leadership position. Proper succession planning can help ensure that there is someone capable of running the company when the party currently assuming those responsibilities suddenly becomes unable to do so.
Succession plans can include key details that allow for a smooth transition of authority, even if it is a temporary change. These documents help others at the company move someone into a currently empty role. Succession planning can be part of the business development process or an aspect of someone’s individual estate planning process.
Executives and owners who provide instructions on how someone else can take over their role don’t have to worry about the company that they run failing if anything should happen to them. Their succession plan can also help to preserve the careers of the workers they hired.
While the company may not be a living being, its operations often have a major impact on numerous people. As such, creating a succession plan can be as important for someone’s legacy and preservation of their interests as the creation of a personal estate plan.