We may think we will be in charge of our business forever but the truth is that one day we are going to have to step back and hand the keys over to someone else. Succession planning is the process of identifying and developing new leaders for when you leave the business to ensure that the business is in safe hands when the time comes.
Why do I need a succession plan?
A succession plan is basically an exit strategy. Having a succession plan enables you to plan for your future. Estimating when and for how much you plan to sell your business can help prepare you for retirement.
How do I create a succession plan?
First and foremost you should know exactly where you want your business to go after you leave.
Do you want to sell it to an external party or employee? Do you want to hand it down to one of your relatives?
Once that’s decided, you can simply follow these steps. It’s best to enlist some help from your business advisor during this process to ensure you have covered all bases.
Set a date
Include an estimate of when you wish to leave the business and plan backwards from there. The more up to date policies and procedures are, the more value your potential buyers will see. It’s also best to ensure the business can run autonomously.
Get a business valuation
If you are selling to an internal or external party, you should include a valuation of the business in your plan. This can be prepared by a separate individual to the buyer and seller, to give the fairest evaluation to both parties.
Consider tax implications
You should speak to your accountant and consider the tax implication of you leaving the business. As you are selling assets, you may be liable to pay Capital Gains Tax (CGT) on the sale of your business assets.
Create a timeline
Having a timeline in place can help you know when you should start training employees or family members in aspects involved with running the business.
How can I ensure my succession plan goes to plan?
Even the most well thought out succession plans are not set in stone and may not go according to plan. By keeping key personnel involved in preparing your succession plan, you can ensure they are aware of your plans and their future career progression. Keeping track of your progress towards your goals will help you stay on track and help ensure your succession runs smoothly.
Concerned about your succession plan? Get in touch with our friendly team on (08) 9327 1777 so we can assist you in preparing your own personal succession plan.