Developing a Suitable Succession Plan

When you have decided to exit the business, good succession planning will assist you in successfully transferring your organisation to any new owner.

If you develop a fantastic succession plan, you can transition out of one’s business more easily. You can start your succession planning years in advance, which can help you meet your future requirements. It’ll also help your heir prepare for their present and future work responsibilities.

There are a variety of things you’ll need to think about when developing your succession plan. The following measures will assist guide you through the procedure.

1. CHOOSING A SUCCESSOR

You need to recognise who you would like to take over your organisation. The person you hand it off to could be any of the following:

• A family member
• An employee
• Business partner
• External buyer

One of the key rules to managing this is understanding. You should ensure you have considered what is best for your business and take into consideration the core competencies and cultural fit and willingness of the person you are planning to hand over to.

2. ENTERPRISE VALUE

You ought to value your company early and on a regular basis. Your company’s value will assist you understand how much your company is currently worth. The valuation of a business will likely change before you plan to depart, but a good valuation will aid with your succession planning.

3. PUT A PLAN INTO PLACE

An entire succession plan should incorporate the main values of one’s business and cover areas like:

• What is the planned departure date?
• Who will take over the company?
• Are you selling your business, or gifting it?
• What’s the market value and are there some implications?
• Will there be a change in business structure?
• Are there some prerequisites to meet in relation to ownership?
• Will you need to modify or transfer any licences or registrations?
• What are the financial and/or insurance changes?