Preparing your succession plan

When writing your plan and before you start using it, consider the following:

• Using the template as a guide. Before you start writing, read the template and decide which sections are relevant for your business. Add or remove sections if you need to. Once you have the main parts move through the template and guide section by section.
• Use the [italicised text]. The italicised text in the template are questions to consider and guide you through the creation of your succession plan, if they don't apply to you, ignore them.
• Seek help. If you aren’t confident in completing the plan yourself, speak with a professional (i.e. Business Enterprise Centre, business adviser or accountant) they can look through your plan and provide advice.
• Review. Review. Review. Reread your final plan and ask other impartial people to proofread it too.

Your succession plan can consist of these elements:

• Title page. The title page of your succession plan should include some brief information on your business, including your:
• Business owner's title. The titles of the business owner(s) listed above (e.g. owner/manager).
• Business name. Enter your business name as registered in your state/territory. Find out more about business and company registrations.
• Main business address. Enter your main business address. This can be your home address if you are a home-based business or your head office if you have more than one location.
• Australian Business Number (ABN). If you have registered for an ABN, enter it here.
• Australian Company Number (ACN). If your business is a company, enter its ACN here.
• Date prepared. The date you finished preparing your succession plan.

The succession section. The succession section requires the most consideration and should cover areas such as:

• Current owner(s) covered. Who is covered by this succession plan? Does this apply to all partners or just you?
• Planned succession type. Detail the type of succession you have planned. Will you be completely removed from the business or only partially? If it is a partial succession, what will be your future involvement in the business?
• Successor details. Who will take over as your successor - a family member, business partner or another person? How and when will you communicate this to the organisation? Do you have an alternative successor in mind if your chosen successor is unavailable?
• Succession timeframe. When do you plan to implement this succession?
• Restrictions. Are there any restrictions placed on your succession?
• Proposed organisation structure. Briefly outline what the organisation might look like when you leave.
• Key personnel changes. List all the positions in the organisation and the people that are expected to fill the positions in the event of your succession.
• Skill retention strategies. How will the business ensure the skills of staff are maintained and updated? Do you have an appropriate allocation of responsibilities? How will new responsibilities be documented and communicated to staff? What internal processes will you implement to regularly check that the current skills of staff members are still appropriate for the business?
• Training programs. What training programs will you organise or suggest for possible successors? Are these in-house or conducted by external providers? Have you considered change management training for the organisation in preparation for or after the succession?
• Registration transfers: Which registrations do you need to transfer/change (e.g. business name, ABN, ACN, GST, intellectual property, domain name, local licences and permits)?
• Change of business structure. Do you need to change your business structure? (For example, if the business was a partnership will the structure become a sole trader.)
• Other transfers. List any other leases, memberships, or obligations.
• Contracts/legal documents. Is there a legal document that dictates the terms of the succession? If so, what are the terms? Are there any contracts that need to be modified in the event of the succession (e.g. a partnership contract)? Are there new contracts to be prepared?
• Buy-sell agreement. If you are in a partnership, do you have a buy-sell agreement in place? What are the terms? Will the remaining partner(s) buy your partnership share or will it be open to external partners/family members? Does this arrangement apply to all partners in the organisation?
• Will/testament. As the business owner(s), have you prepared a will or testament? What happens to the business or your share of the business in the event of a death?
• Current insurance: What insurance policies do you hold in the event of a disability, death or injury?
• Succession timetable. Outline a timetable that should detail each phase of your succession process.
• Contingency/risk management. Detail the risks to your succession and any contingencies. For example, if the sale price you expected is not met, what will happen?

The finances section. The finances section of your succession plan covers detailed financial information relevant to the planned succession of your business, including:

• Current value of the business. Enter the current market value of your business.
• Retirement income or payment. Detail any retirement payments required from your planned succession date. Detail the terms of any pay-out agreement including whether it's a one-off payment or regular payments.
• Sale details. If you put your business on the market during the succession, enter the minimum sale price you require, the length of time you plan to have the business on the market, and who will receive the proceeds.
• Buyout details. If you're in a partnership and you plan to arrange a buyout, enter the value of your share and your share in percentage terms. Also, detail the value and percentage you will sell to existing partners, family members or external third parties.
• Taxation. Detail the taxes payable in the event of a transfer or sale.

Supporting documentation. Under the supporting documentation section, list you’re the attachments included in your succession plan. These may include copies of:

• Business name registration certificate
• Australian Business Number (ABN) registration
• Australian Company Number (ACN) registration
• Goods and Services Tax (GST) registration
• Insurance papers
• Lease papers
• Market evaluation of the business
• Partnership agreement
• Buy-sell agreement
• Retirement payout agreement
• Contracts relevant to the succession
• Will and testaments
• Resumes of potential successors.