Do you have a succession plan in place for your business? What would happen to your business if you were unavailable for a period of time, due to illness or an accident? 43% of family businesses say they don’t have a succession plan in place.
Every business, whether large or small, should have a succession plan in place to protect the future of the business
What Is Succession Planning?
Succession planning is the act of creating a plan to transfer ownership or management of the business to someone else. It might not be something that you want to think about, but it’s a practical issue that’s important to consider. After all, you might choose to retire one day or something unexpected may happen and you might not be able to run your business any longer.
Succession planning helps to ensure you get to choose what will happen to your business. You can make sure you put the right people in charge, put your mind at rest, prepare for anything, and even start to look forward to retirement.
What to Include in a Succession Plan
There are several elements you should include in a succession plan if you want it to be comprehensive.
Some of the things to include in your plan are:
- A succession timeline – details of when the succession might take place (if according to plan)
- Potential successors – who might take over the business, whether it’s new owners or management
- Standard operating procedures – formalising these helps to ensure the business can continue to run smoothly once you are no longer there
- A business valuation – how much the business is worth
- Succession funding – funding set aside for the transition period
How to Start Succession Planning
Writing a formal succession plan is just one step that you might want to consider to get everything in order. Additionally, you might want to ensure that you have written a will (and so have any business partners) and that you have your finances in order.
One of the things that you will want to consider first is who your successor might be. Whether it’s a family member, a business partner, or someone who is currently in senior management, you need to consider how to prepare them for taking over. There may be steps that need to be taken to ensure they have the right skills, experience, and knowledge to run the company.
Informing staff and shareholders about a change in ownership is another important thing to consider. This is something you might include in the timeline of your succession plan, as well as how everyone will be informed. HMRC and other relevant bodies, such as Companies House, may also need to be informed of any changes.
Preparing to Move On?
Are you preparing to move on in your business? Even if you are at the start of your business Journey, all business owners should consider succession planning to prepare for the future and ensure the continuation of their business.
Want to find out more? Why not send us an email at [email protected] or get in touch with us by calling 020 3330 0827. At BedrockHR our team have a wealth of experience working with business owners to help them prepare the future.