A Business Succession Plan ensures that in the event of an unforeseen or adverse occurrence, a business can continue to operate in an effective manner.
Business succession can be viewed in two ways:
- Voluntary departure of a business owner
- Involuntary departure of a business owner
And common scenarios often considered when embarking on succession planning include:
- A business principal wanting to retire or resign
- A business principal suffering a serious injury or illness
- A business principal becoming bankrupt or legally incapacitated
- The death or total and permanent disablement (TPD) of a business principal.
To harness succession planning, you can work with Prosperity to assess your current position, set out what you want to achieve, and develop a plan for getting there.
Succession planning should not be separate from your regular business planning. It is part of considering your future financial position. These activities are linked and when started early, succession planning can help to prepare your business for the long term.
Some of the key succession planning activities we often recommend include:
- Thinking about when and how you might want to exit your business.
- Reducing reliance on your own personal exertion and knowledge, training and developing key staff, effective structures, introducing rewards to encourage performance
- Establishing customer relationships linked to the business and its brand; not individuals
- Developing systems and processes to reduce reliance on key people
- Reducing potential threats by increasing the range of services offered
- Effectively using debt to provide capital to expand and grow
- Reviewing gap between current business value and where it needs to be
- Making it easier for a purchaser or investor to finance goodwill
- Preparing your estate planning
- Maximising the use of available tax incentives and gains.
