If you plan to preserve your family business for future generations, you need a strong succession plan. Strategizing about succession can stabilize your retirement income, guide the transition when the time comes and prepare the company to weather unexpected events.

Start thinking about the future with this guide to business succession in Tennessee.

Get the business finances in order

When planning for succession, you need a complete picture of the business’s financial status. This includes updated records, tax returns, inventory details and a thorough professional valuation. Having these documents organized eases the process of creating a succession agreement and preparing for the transition.

Consider skills and interests

Perhaps you have always dreamed of your oldest child taking over as CEO, but he or she has more of an artistic inclination. Even when those of the next generation want to step in, they need to develop the knowledge and aptitude to do so. Have frank conversations about expectations before assuming that your kids want to and have the ability to fill your shoes.

Plan for eventual buyout

Forbes recommends using the earnings capitalization model to determine a fair value for your small business. These numbers will inform a buyout arrangement that appeals to your successors while ensuring that you can comfortably enjoy your retirement. Knowing the true value of your company also allows you to make the most of the business’s assets and reduce your family’s tax burden upon succession.

Stay open-minded

You should have an ongoing conversation about succession even if you do not expect to transition the business for many years. Be flexible with your plans as things change over the years. Create a culture of honesty around the next steps for your family business to increase the chances that everyone is on the same page. For the company to survive transition, the family must be open to a potential change in structure, direction or other aspects of the business.

You may find, as many families have, that seeking professional advice facilitates the creation of a successful succession plan.