Succession planning

Succession planning is when you create a detailed plan to guide your business through major leadership transitions. It involves deciding who will take over when you’re no longer in charge as well as details of any required buy/sell agreements and related funding. It considers the tax and other financial implications of the transition, keeping the financial security of the business and key stakeholders in mind.

A succession plan helps ensure a smooth transition for your staff, so your business keeps running effectively through and after the transition. Succession planning is important for any leadership transition—planned or unplanned. It can be especially helpful when leadership changes are prompted by unexpected events like the death or disability of an owner or other key people in the business.

You’ve worked hard to build your family business. Having a strategic succession plan is key to protecting what you’ve built. Succession planning helps ensure a smooth leadership transition for your business—whether it’s being passed to the next generation or to new ownership—and helps maintain stability and confidence for your team.

Without a plan, leadership transitions in your family business can place heavy financial burdens on your business and your family, causing confusion and disruption during an already-intense time. Succession planning helps get your family members on the same page, preparing them and your staff for the eventual transition. It addresses the financial implications of transferring ownership early on so that when the time comes, you can protect your business and your family’s financial security.

Creating an effective succession plan for your small business means charting a course that’s right for you.

While each business owner’s process will involve many of the same steps, the specifics of your plan will be as unique as your business. Some of the steps in creating an effective succession plan include:

• Identify key roles within your business

• Develop plans for bringing in or training potential successors for your role and other key roles

• Establish a clear timeline for transitions

• Address any legal or financial matters, establishing funding tools where needed

• Communicate your plans to your stakeholders and family members

• Monitor and adjust your plan as your business evolves

Speak with a Business Relationship Manager for support on your succession journey.