The Importance of a Succession Plan
Whether you plan on retiring in 5 or 50 years, it is still important to develop a good succession plan, should the want or need arise to move on from your business. A succession plan is the blueprint for any business exit strategy. If it is well managed you should be able to access your original funds and be compensated for the years of hard work that went into building your business, as well as feeling confident that the success will continue. A succession plan can help ensure that when a vacancy does occur the organisation has available a group of people, or at least one or two, who have received some preparation for your position as owner and/or manager. It should also include:
• when you plan to exit the business
• who you would allow the business to be sold to
• whether you have chosen to sell all of the business or sell down gradually
• tax and legal implications of your exit from the business
It should go without saying that succession planning clearly needs to be a mindset within the whole organisation and is not limited to just CEO or management succession planning. There are many key recommendations when it comes to creating a succession plan for your business.
1. Clarify future strategic directions that embrace the mission, culture and emerging priorities of the organisation. It is important to understand your personal and business goals.
2. Understand the market and value of the business
3. Establish leadership competencies (linked with the strategic intent of the organisation) for the various positions that will eventually need to be filled.
4. Identify potential buyers and groom successors, even if you’re not currently thinking of selling.
5. Identify future leaders through a variety of assessment strategies, and maintain pools of high potential staff – at all levels of the organisation. Provide developmental opportunities that are critical to an individual’s leadership preparation.
6. Conduct a SWOT analysis on the business. Identify the areas of competitive advantage within your business.
7. Communicate with the stakeholders about the management of succession planning.
8. Always be ‘sale-ready’ – opportunities could come your way, tragedy could strike or a change of scenery may simply be needed.
Regardless of the end result there are a number of facets that need to be considered and addressed to ensure not only the smooth transition in the day-to-day running of things but also that the established success, a result of the parting owner’s hard work, is maintained.
If proper planning has not been implemented and a transition of ownership takes place this can see not only the possible demise of the business but may also cause significant emotional stress and financial burden for those who are left associated with the business. This could be the loved ones of a deceased or the staff that stay at the business when owners change.
As a responsible business owner it is important to have plans in place to secure the future of your hard work and dedication. Most of you wouldn’t dream of not having a Will so don’t put aside the importance of a well thought out succession plan. Here at The Quinn Group, we have an experienced team of lawyers and accountants who can assist you with all of your succession planning needs. Contact us now for more information by submitting an online enquiry or call us on 1300 QUINNS (784 667) or on +61 2 9223 9166 to book an appointment.