In his weekly business banking post our CFO Greg Taylor talks about the importance of succession planning in your business.
When you are working flat out in your business and hopefully enjoying yourself in the process, it is hard to think about you not being in the business.
You need to think about it. Having a succession plan or exit plan is important for a number of reasons. A good plan will help you to maxmise the return you get from the business should you choose to sell up or retire.
If, heaven forbid, you have health issues who will run the business or do what you do if you cannot be there? You need to minimise any disruption to your operations.
Another reason for succession planning is stepping back so you can concentrate on working on business expansion or additional business ventures. You need to make sure you have time to work on your business rather than just in it.
There are templates on Government and business association websites that can help you think through key considerations. You need to work out how your involvement will change. You also need to determine your successor and have a back-up plan in case they are not able to do it.
What training or additional skills or information will that person need? Will other people also need to change roles to back fill that person or work in a new structure for the business?
If you are looking at retiring, selling or stepping back, give yourself a timeframe for this to occur. On the financial side, work out the current value of your business and your minimum sale price (if you are selling), any retirement income payable and any taxes payable.
Once you have your plan written down, show it to some people you trust to make sure it is achievable. Once you have finalised it, you may want to start communicating the plan to staff and other people so they are prepared for the change.
Please share your tips or thoughts on succession planning below.
This post is based on Greg’s weekly column in the Newcastle and Lake Macquarie Post.