As a business owner, much of your time is focused on day-to-day logistical, operational, and client relationship management processes required to build & maintain a healthy cash-flow throughout your business.
For many, this can often absorb time away from building strategy & development plans, as well as considering the important areas pertaining to what will happen when you step away from the business altogether.
Succession Planning is one of the toughest decisions you will encounter as a business owner, however many leave it until they are set to exit before considering the future/legacy of their business.
To assist you in taking the first step towards planning, we've highlighted the various practices to consider when developing a Succession Plan - helping create a best suited strategy applicable to you and your business.
Timing is Key - 'By Failing to Plan, You Plan to Fail'
For many SME businesses, identifying a suitable future business leader can be a prolonged and challenging process - therefore commencing early is a critical first step.
Business succession is a complicated process, and as such, Succession Planning with require assistance and expertise from multiple business advisers (such as solicitor, banker, business broker, executive search professional, etc) - not just an accountant.
It is important you invest time in pulling together the necessary resources and documentation, alongside the expertise of these advisers well in advance of your exit.
Furthermore, the need for business succession may be unexpected, therefore having a pre-planned strategy will assist in creating a calm and transparent transition.
Remember, the earlier you commence your planning, the better the outcome will be for you, and the other parties involved (ie. Family, Stakeholders, Employees, Clients/Suppliers).
What to Consider when Establishing your Plan?
Overall, your Succession Plan should consider how the strategy will impact two core areas - you (as the exiting party) and the future of the business.
Personal Objective during Succession
A well-documented Succession Plan should help in managing the needs of each individual directly involved in the process.
As such, for the exiting business owner, it is important to consider your personal goals, financial considerations, estate planning requirements, and overall preparation for sale / retirement.
Additionally, it is central to consider how stepping away from the business will impact your overall lifestyle, and what you hope to achieve financially following the course of the transition.
Business Objectives during Succession
From a business perspective, the Succession Plan should aim to ensure there is a best practice leadership continuity following the transition from one owner to another.
When documenting your action plan, extensive consideration should be given to how a leadership transition will impact four main components of the business:
- Financial Perspective
- Client Relationship Management Perspective
- Operational Perspective
- People/HR Perspective
If you are unsure how the succession transition will impact these areas of your business, a professional adviser (such as Archer Gowland) can work with you to provide an understanding.
For More Information
For more information on building your Succession Plan strategy, please contact Ian Walker - Managing Director or Smiljan Jankovic - Director - on (07) 3002 2699.
Archer Gowland will be releasing a Succession Planning Series in 2020. To keep up-to-date on all releases contact our office - (07) 3002 2699.