It takes a lot of careful planning for a business to succeed. Apart from ensuring you have the right products, services, and messaging, you’ll also have to futureproof your business and prepare for turnovers to continue the legacy you’ve worked hard to build. This process is known as succession planning, and a well-conceived plan can spell the difference between brief prosperity and success that carries over many generations.
Here’s what you need to know about succession planning and how to implement one for your business:
All About Succession Plans
Succession planning is a long, complicated process that helps business owners decide on the best person to transfer their business to and ensure its continuity. It also eases the stress and burden of the turnover process and helps the successor prepare for their future work responsibilities.
How to Implement One for Your Business
It can be challenging to develop a succession plan by yourself, so it’s best to work with seasoned lawyers, who will make the process much easier. To get started, here are the steps needed to create and execute a succession plan for your organisation:
1. Select a Successor
The first step is to create a shortlist of people you believe can run your organisation according to your values. You must choose someone who has the required skills and experience to take after you. Luckily, a succession lawyer can draft and implement a legally valid plan for your successor, providing them with guidance and protection.
2. Determine Your Business’s Worth
The next step is to figure out how much your business is worth. Value your business early and consistently to identify its current worth, which will help you refine your succession planning. It will also give you an idea of the different challenges your business may face in the future, which your successor must be prepared to tackle.
3. Create and Deploy a Succession Plan
As early as now, target realistic and achievable goals for your organisation’s future, which will help you develop plans for them. These goals may also prompt the creation of short and long-term timelines.
You’ll also need a few legal documents to outline and cement your company’s terms of succession. You must consider two factors: the transfer of power or how your team will handle the transfer of management and control, and the transfer of assets, or how your successor will take charge of your business’s wealth.
It is also important to acquaint yourself with the different powers of attorney. A Power of Attorney document permits another person, your attorney, to act on your behalf for your affairs. A General Power of Attorney is usually used in business contexts and takes effect on a specific date. An Enduring Power of Attorney grants your attorney the authority to handle all or part of your business matters.
Your business’s succession plan may regularly refer to these documents along with a valid Will. A succession plan can mitigate the adverse effects of a business owner’s death on the business, so it is crucial to work with a qualified and reliable succession advisor to handle this aspect.
4. Review Your Plan and Update It
Once you have your plan, be sure to review it and update it regularly. Other parts of your plan may change, or your circumstances and goals will evolve, so it’s essential to keep your plan current to ensure it is effective and valid for your business.
Conclusion
A succession plan helps businesses maintain stability even in the event of the death of the business owner. Without it, the organisation will be more vulnerable to conflict, disruption, and uncertainty, quickly sending it into a downward spiral. By crafting a succession plan, you’ll prepare your business for even the most destabilising scenarios.
Bickell and Mackenzie is a law firm with solicitors specialising in Wills and Estates administration, family law, notary public services, business sales, and conveyancing in the Redlands area. Contact us today to learn more about how we can help you prepare a succession plan for your enterprise!
