Leaving your business is a big transition for you, your staff and your successor.
A succession plan will help you leave on your terms and the new owner get the best possible start.
A succession plan is a strategy for identifying, developing and transitioning a new leader or owner for your business when you need to leave whether it’s for retirement, a different opportunity or health reasons.
Planning ahead ensures the new owner has everything they need to successfully assume their new responsibilities.
Planning your succession can also generate other strategies for a smooth transition, for example, providing training to help your business adapt to a new leader.
Your succession plan should include specific information about your business including, its value, employees, and registrations, as well as your departure strategy and plans, e.g., details about timeframes, handover activities and successor/s.
Regularly reviewing and updating your plan as your business changes ensures you are ready in case you need to leave earlier than planned.
Succession plan steps
- Find your successor:
Who do you want to take over your business? A relative, business partner, employee, or someone outside your business? Do you need to plan for a new leadership structure supported by new roles?
- Value your business:
How much is your business worth? Find out how to value your business.
- Put a plan in place.
Your plan will include:
a. Operational issues – when are you leaving and what responsibilities will the new owner have?
b. Financial arrangements – value of your business and if you are selling or gifting it.
c. Training - what do you need to provide for your successor and staff?
d. Legal requirements – changing licenses and registrations.
- Keep it current:
Review your plan regularly so it reflects your changing business. Your succession plan may be something you start years before you are ready to depart your business.
- Final handover:
Create time for the new owner to officially take over with final handover of responsibilities. A detailed succession plan will support this and ensure a smooth transfer of ownership and operations.