Preparing for change can be challenging. Effective succession planning is critical to the ongoing success of your business. A strong future requires careful planning, and your succession plan is an essential part of your overall business plan.
What is succession planning?
Succession planning is handing over power to a new generation. Even if you wish to eventually sell your business or pass it on to a family member, you will need to have a succession plan.
Choosing a successor?
Firstly, you will need to identify a likely successor with the right skills and who wants to take over your business. This could be either a family member, employee, business partner or outside buyer.
What to include in a succession plan?
Generally, your succession plan should address financial, tax, legal and operational considerations in relation to your exit from the business. Details will be different for every business, but you will need to ensure your succession plan is achievable and measurable.
Valuing your business?
Importantly, you will need to value your business. Understanding how much your business is currently worth will assist you in your succession planning and determine what you will need to do to get the business ready for your exit.
Implementing your succession plan?
The success of your succession plan depends on setting a realistic timetable to meet key milestones and effectively communicating these to ensure that everyone involved is on the same page. Develop a timeline that highlights the transfer of responsibilities and identifies the key milestones.
Like any good plan, you should regularly review your succession plan and update it to include any changes to your business or circumstances.
The first step to developing a succession plan is to start the conversation. Stepping back from your business can be an emotional and difficult experience, so having clear goals and timeframes can help you to let go. It is also important to consult a professional when you are developing your succession plan.
At HLB Mann Judd, we provide tailored succession planning advice and have professionals across a broad range of specialisations such as business advisory, tax consulting, valuation services and wealth management. Our team of advisors can help structure your succession plan so that you can grow and future-proof your business for the next generation, while also funding your retirement and ensuring a smooth transition.