Small businesses are at the heart of Connecticut’s economy. But sadly, less than half of them survive to a second generation. If your goal is for your company to keep operating past your retirement and longer, then you’ll want to engage in some thoughtful succession planning now.

There are multiple things to consider when you set out to create a succession plan. You should be prepared to have some open and honest conversations with relatives, attorneys and others who need to be involved in the process. It won’t always be easy, but it will be worth it.

In choosing a successor, you may have to decide among equally qualified children or employees. There may be complex relationship dynamics involved as you feel pressure to keep everyone happy or at least at peace. To maximize the chances that your company survives, focus on evaluating all candidates on their merits. Give them all a chance to learn about the business, to gain experience in different parts of it and to show you that they’re ready to step in.

Once you decide on the person you want to take over the business, you’ll need to engage in further planning steps. You should:

• Create a transition plan that allows for a gradual shifting of roles and responsibilities.
• Explain the plan to family members, business partners, employees and others to help minimize conflict.
• Consult with financial and tax planning professionals to gain confidence that you’re making the right moves for both the company and yourself personally.

You should also consult with an experienced business law attorney during your succession planning. As part of your transition team, a lawyer can help you:

• Negotiate and implement buyouts
• Create a family limited partnership
• Effectuate the transfer of ownership rights (such as stock)
• Handle potential employment law issues related to the transition
• Identify tax laws that impact the business
• Revise company bylaws and related documents to reflect the ownership changes
• Amend contracts with vendors and suppliers as needed

By engaging in business succession planning early, you can provide continuity to your loved ones and employees at what can be a challenging time. A carefully devised plan gives you a chance to put the right people in the right positions, increasing the likelihood that your business will survive and prosper after your departure.

The lawyers of Gesmonde, Pietrosimone & Sgrignari, L.L.C. in Hamden and East Haven advise Connecticut businesses in a full range of transactional matters, including planning for future growth and succession. You can reach our team by calling 203-745-0942 or contact us online to schedule a consultation.