As a business owner, your days are full and the years pass quickly — before you know it, retirement is not far away. If you’ve worked hard to build your own business, a well-thought-out plan for passing the reins to a successor can provide peace of mind. Whether you transition your company to a family member, a long-time employee or a new buyer, a succession plan can ensure a smooth transition that helps secure your wealth and your legacy.

“The day you go into business is the day you should start planning how you’re going to get out of it. I think it’s just as important and sometimes just as difficult. That’s why the planning part is so critical,” says Tom Trapp, former dealer principal at Bobcat Enterprises in Ohio.

Planning early gives you the upper hand and allows you more time to consider the various exit options available to meet your goals. The checklist below will help you get started.

Kick off the planning process by asking yourself these questions:

• What is the timing of my departure?
• Have I identified a team of professionals to help me through the succession planning process?
• Do I know the value of my business and how it can affect my transition options?
• Have I identified a successor and is he/she prepared to take on a leadership role in the company?
• Will I play a future role in the company?
• Has my successor been involved in the planning?
• Have I communicated my plan with everyone who needs to be in the loop?

Begin with your goals.

• Plan the timing of your departure. Your timing and market timing might not align perfectly, so be flexible.
• Determine your role in the transition. Consider your current role during the transition period and determine the best person to continue mentoring your successor.
• Know your options. Review and understand your transition options, such as ESOP, buyout, gifting and sale. Each option provides a different outcome.

Choose and prepare your successor.

• If your transition is internal, identify a successor with the leadership and management skills, desire and vision to replace you. Assess his or her capabilities and skill gaps, and implement development plans to bridge those gaps.
• If you plan on transitioning to an external buyer, build a strong management team to maximize the appeal of your business to potential owners and prepare that team to lead business longevity.

Identify a professional team to help you.

• Build a team with professional succession planning expertise. The team can and should include professionals such as a qualified CPA, CVA, attorney, insurance agent and personal financial advisor.
• Collaborate with professional resources. Complete a business valuation, draft the long-term transition plan and develop a buy-sell agreement with the proper funding options.
• Broaden your team. Most business owners only go through succession planning once. Talk to other former owners who have been successful in transitioning their business.

Communicate your plan.

• Complete a statement of intention. Formalize your succession with a statement of intention, which states your anticipated departure timetable, your successor’s name, a funding plan for the transition and a statement of what the future ownership and management structures will look like. You can share these with all the necessary parties.
• Communicate with your employees and family. Keeping everyone informed is critical for a smooth transition. Hold separate meetings with both your employees and your family.

Ultimately, creating a succession plan as early as possible keeps more control in your hands for how you’re going to step away from your business life and move into your retirement life.

Reprinted with permission. This post by Bobcat Company originally appeared here.

Impact Dakota is available to assist with Succession Planning, click here to learn more!