What is succession planning and where do you start?

Let’s start by explaining what a Succession plan is.

Succession planning is the process of identifying the critical positions within your organization and developing action plans for individuals to assume those positions.  Succession considerations don’t only relate to business and could also be considered in keeping family wealth in your bloodline for generations to come.

The most common reasons that business owners don’t have a succession plan could be procrastination or that they have no family members suitable to step into ownership positions.  Others just don’t know where to start with it.

If any of these sounds like you, then a great first step is to learn what your choices are. A good place to start is by talking to other business owners who have retired or developed successful succession plans that don’t involve family.  A popular strategy might be sale to a senior employee, so grooming such an individual a few years ahead might be an option.

This will give you some ideas to help you develop a succession plan that is right for you. Remember that succession planning goes further than your business and includes how you are going to spend your time after you exit the business.  It would also include how you will manage your family wealth in retirement and even go as far as your Estate Plan.

What should be included in a Succession Plan?

1. Have a plan before you decide to sell your business.
2. Include key stakeholders in succession plan decisions.
3. Decide on your minimum requirements for payment.
4. Work with a succession planning professional or group.
5. Create a plan for your life post-succession.

Be mindful that there will likely be some emotions associated with succession planning. This is a big transition for many, and it may bring up unexpected feelings.  Speaking to other business owners, family, and succession planning specialists could be useful to help you go through this transition.

Having constructive conversations regarding wealth management and succession planning helps everyone involved in the process including managers and leaders in the business, employees, key customers and suppliers, and ultimately, family members

We will talk more about the consequences of not having a Succession Plan in another article.

In the meantime, if you would like advice on where to start or want to create a Succession Plan, book a call with our specialist Alec Brandon.