Succession planning is the process of preparing for the transition from one business leader to another. It involves various estate planning strategies that are meant to improve the chances of success for a family business when the original owners retire, pass away, or are otherwise ready to hand over control of the business to the next generation.
The following business succession planning checklist will make sure you have prepared yourself and your business for the future. Aspects of this plan will include establishing career progression paths for new employees, providing incentives for higher management, setting long-term goals, and more!
In the world of business, planning is always wise, particularly in the areas of capital growth and getting new customers. So, to encourage families to be proactive in their planning, we have created a comprehensive checklist to get you started. Continue reading to see why succession planning is so important for family businesses, and the steps to take to implement it.
Why It’s Important to Prepare a Checklist
Business continuity is very important and will continue to be when the company is no longer yours to run.
Succession planning is an important part of the talent management process and provides a way to identify key people—with the right skills and experience—who may be ripe for promotion and thus will need replacing in their current roles.
Failure to plan for succession is a common cause of small business failure, so the value of succession planning cannot be overstated. For a profitable and flourishing business to fail due to the lack of succession planning is completely avoidable.
Your Succession Plan Checklist
Complete the following tasks to complete your five-year succession planning checklist for family businesses:
- Set specific long-term goals for ownership
- Establish a set of necessary managerial competencies
- Evaluate the management team
- Debrief the assessment
- Seek out high-quality legal and tax advice
- Create a robust performance management system
- Identify the successors.
Planning should begin years before any succession takes place. During the process, both the current owner and any potential successor should set out their long-term goals for the business. Draw up a list of the skills you believe are essential for any successor. Consult with quality tax and legal advisors, as long-term tax planning may help ease future costs.
Consider incentives, not only for senior managers to stay put rather than jumping ship before you leave, but also to ensure that talent lower down the company ladder has a path they can commit to.
The Benefits of Business Succession Planning
Some small business owners assume that a family member will take over the business, but it’s best to create a formal plan and discuss any issues with the potential successor(s) you have in mind. When you make plans for a successor, you ensure that your company can live on even after you’re gone.
You’ll have peace of mind once you’ve created a succession plan well in advance of your departure. Rest assured that your business is in good hands when you leave.
Don’t Wait to Start Your Succession Planning
Succession planning is too often left to the last minute or until it’s too late. If you haven’t begun your business’s succession plan, it’s probably past time to think about one. With Bartercard, the money you save selling old stock and increasing profit margins can be invested in developing the next generation of your company’s leadership!
Contact Bartercard today to strengthen the future of your business.