If you put in the effort to develop a successful business succession plan your business can continue to thrive long after you have left the business. The purpose of a business succession plan is to help you successfully transfer your business to your designated successor.
A high-quality succession plan will make sure that you are ready for the change to occur, it will also make your transition out of the business less difficult and it will also prepare your successor to undertake their present and future work-related responsibilities.
Choose Your Successor
You first need to decide who you would ideally like to take over your business. Your designated successor could include a family member or a business partner or a current employee or an outsider buyer.
When choosing a successor, you need to evaluate and decide what is best for your business. This means that you need to make sure that your successor has the right skills and capabilities to run your business for the foreseeable future and also make sure that your business continues to succeed.
Value Your Business
It is important to make sure that you value your business on a frequent basis. By understanding the value of your business, it will make it easier for you to understand how much your business is worth at the present time.
The valuation of your business has the capacity to change significantly before you plan to leave. This means that having good valuation will help you with the succession planning of your business.
To make sure that you value your business properly you will need to have access to a large range of information. This information includes; your financial statements from the past five years. This includes; cashflow statements, annual turner over, debts and profit and loss statements.
You will need to provide details of your physical assets such as; buildings and machinery and stock.
You will need to provide legal information such as; legal documents such as; leases and your insurance policies.
You will need to provide registration papers such as; Australian Business Number (ABN), your business name certificates, licenses, permits and any other documents that indicate that you are complying with any government related requirements.
You will also need to include your business profile, procedures and plans. This includes; market conditions such as the details of your competitors and how your business compares to these competitors.
It will also include salary information, business history such as; the start date of your business, business ownership and any location changes that have occurred.
A business procedure documentation will include; marketing related information, customer service procedures and details of your staff roster.
It will include a business plan related to your marketing and any growth or expansion plans that your business has.
It will also include your staff, supplier and customer information. This will include job descriptions and employee details such as; their work history, performance reviews, pay rates and skills and experience.
It will also include details of supplies and supply prices and any supply agreements that you have entered.
It will also include customer details such as; customer numbers, profiles and any direct marketing activities.
Keep Your Succession Plan Current
You need to make sure that you review your plan regularly. As time passes by it is likely that things will change and evolve and therefore you will need to make sure that your succession plan is always up to date so that you can be prepared for an event where you might need to leave your business at an earlier date than what you had originally planned to.
Get Ready for The Final Handover
By having a clear and concise succession plan that it also current and up to date you will be ready to step aside when the time is right. By being organised and having a succession plan first established years in advance you will make it a lot easier for the transition to be as smooth as possible. This will reduce the likelihood of any disruptions happening to the business’s operations.
The Team at Vault is here to help, offering a full range of financial products to assist you with your financial objectives. Contact the Team at (07) 3012 6724, email us at firstname.lastname@example.org or use the chatbot below to schedule a meeting.