If you own a business, you likely spend a great deal of time thinking about the business and what you need to do to protect it.

However, you could be overlooking a critical component of running your business if you do not have a business succession plan in place. These plans can be critical to multiple parties, so it can be important that you have one.

Why it matters for you

Having a business succession plan allows you to make decisions for the fate of your business after you pass away (or retire or otherwise leave the business). Among other things, you will decide who will take your place, whether this is an employee, a family member or outside party.

Knowing that you have taken the necessary steps to leave your business in trusted, capable hands can give you great peace of mind that the right person will step in and take your place if need be.

Why it matters for your loved ones

Your loved ones can also benefit from this type of planning. Because the business would go through probate if you have not taken steps to pass it on in your estate plan, there could be a long, difficult road to resolving business transition issues.

With a business succession plan in place, your family could potentially avoid spending years fighting over ownership and responsibilities and determining who should run the business.

Why it matters for your business

Even if you do not know every one of your company’s employees, vendors or customers, they too can be directly affected by whether you have a succession plan in place or not. Without your leadership, the business could change, and not always for the better.

However, if you personally select the person to take over for you or to whom you will sell the business, there is a higher likelihood that he or she understands your approach and can honor your legacy at the company. This can streamline a difficult transition and minimize operational changes or challenges.

Your business is likely a big part of your life. It should therefore be part of your estate plan, as well.