With millions of baby boomers retiring, the issue of succession planning has become a top concern for many businesses. It is not a simple issue to conquer, of course. It can involve family, business partners and boards of directors. Turning over the keys to the right person is one of the most important decisions a business owner can make. Large businesses, for example, can trip up and select a poor successor and still survive. A small business, though, can die on the vine of discontent if that person turns out to be the absolutely wrong choice. There are several questions to consider when creating a succession plan, and here are a few:

1)   Is there an obvious internal choice to lead the company? If you have been grooming a son, daughter, business partner or other employee, the decision for succession will become much easier. If you are a few years shy of retiring, you may want make that choice ahead of time so there are no surprises when you leave. Prior to your departure, offer management training, mentoring and other opportunities to the anointed successor.

2)   Should you look externally for a leader? Depending on the size of the business, this can be a decent option. You may know a supplier or business partner outside the firm who could take your place. This strategy makes some sense, especially if the employees know the candidate and he or she has acquired the appropriate skill set. At the very least, the new CEO would not be a stranger to staff and clients.

3)   Should you consider forming a Employee Stock Ownership Plan? One thing to consider when you aren't able to transfer to a family member or sell to an outsider is an ESOP. Under this plan you can sell all or part of your stock to the ESOP and end up with a better financial return than other options. However, this requires the expertise of a strong accounting firm such as Boulay to ensure the structure works for you, as well as your loyal employees who will now own the business.

4)   Should you sell to an outside strategic or financial buyer? Clearly, the final option is to sell, and doing so is potentially lucrative. You may not have an obvious successor or the type of business an ESOP could manage. If so, selling can be the best route to follow in succession planning. You will want to be careful in selecting a buyer and get the highest valuation you can.

In other blog posts we will take a closer look at your options in succession planning. You will want to leave your business in the best possible shape, and nothing is more important than putting in place a management team that can ensure continued success.

Meta: You want your business to succeed once you are gone. The best way to ensure that is to begin searching for your successor now, or considering a sale or an ESOP.