Succession planning is smart business planning. It allows you to proactively develop people, rather than simply name them as replacements. Succession planning is about making sure your business can continue to grow and move forward, even when you’re not around to help.
One should approach succession planning in a family business not by thinking about when you are ready to leave, but when the next generation is ready to lead.
One of the things we often miss in succession planning is that it should be gradual and thoughtful, with lots of sharing of information and knowledge and perspective. If this part of the process is executed properly, the succession itself becomes almost a non-event when it happens.
Succession planning should start as early as possible. In fact, most should begin as soon as you can assess and accurately calibrate the performance of the employees and family members in terms of their skills and career growth potential.
In the roadmap below, three key areas are identified when undertaking succession planning:
1. The process of planning succession – developing goals, evaluating planning abilities, assessing family interest in management, determining value-price, personal wealth planning, and mapping out the exit strategy of the founder or owner.
2. The four basic options for the business going forward – selling or gifting to family or heirs, selling to employees or key management, selling to an outsider or a strategic investor, or orderly liquidation or winding down.
3. The advisors that will lead you there. These include legal advisors, financial advisors, bankers and wealth advisors, notarial advisors and finally, business appraisers.
Recognised family business can benefit from a number of incentives and guidance and support from the Family Business Office to assist them in their process of growth and continuity. For further information contact us on 2220 9524.