How to develop your succession plan

When you decide to leave your business, your succession planning will help you successfully transfer your business to your successor.

If you develop a good succession plan, you can transition out of your business more easily. You can start your succession planning years ahead of time, which helps you meet your future needs. It will also help your successor prepare for their present and future work responsibilities.

There are a number of things you'll need to think about when developing your succession plan. The following steps will help guide you through the process.

You need to identify who you would like to take over your business. Your successor could be either be:

• a family member
• an employee
• a business partner
• an outside buyer

Make sure you consider what is best for your business and ensure your successor has the skills and want to take over your business.

You should value your business early and regularly. Your business's value will help you understand how much your business is currently worth.

The valuation of your business may change substantially before you plan to leave, but a good valuation will assist with your succession planning.

A complete succession plan should include the main values of your business and cover areas such as:

• Who your planned successor is - who will take over the business?
• Operational issues - when do you plan to leave and what are your successor’s responsibilities?
• Financial issues - are you selling your business or gifting it? What is the market value and are there any financial implications?
• Training programs – What are the training programs you'll be organising for your successor? Will these be in-house or conducted by external providers? Will you consider change management training for the organisation in preparation for the succession?
• Legal considerations – Are there any legal requirements to meet in relation to ownership? Will there be a change in business structure? Will you need to change or transfer any licences or registrations?

Make sure your succession plan is achievable. Set a realistic timetable and measurable milestones along the way and stick to them. Create a timeline that highlights the transfer of responsibilities. This timeline should be achievable and measurable.

It's important to consult a professional when you are developing your succession plan. An accountant can help identify financial risks and opportunities and a lawyer ensures that you haven’t left anything out.

Review your plan regularly. As time passes your circumstances may change and an up-to-date succession plan will ensure you're always ready in the event you need to leave earlier than anticipated.

If you have made the proper preparations, when the time comes to leave you should simply be able to hand over your business and step aside. By having a clear and current succession plan, you can enable a smooth transition with less chance of disruption to the business's operations.