1. Establish a Team
It is important to form a team of people who can work together to develop and implement the business succession plan. This team should include experts from a variety of disciplines, such as accounting, legal, financial planning, estate planning, and human resources. Each person should bring their own unique skills and expertise to the table.
2. Identify Goals and Objectives
Determine the primary goals and objectives of the business succession plan. This could include a variety of goals such as preserving the continuity of leadership, protecting assets from creditors, or ensuring a smooth transition to new ownership or management.
3. Analyze Current Financials and Structure
Thoroughly review current financial statements and organizational structure to better understand how they affect the business succession plan. This can provide valuable insight into potential risks associated with different options for succession planning, as well as potential strategies for mitigating those risks.
4. Develop Succession Plan Options
Brainstorm various potential options for implementing the business succession plan based on identified goals and objectives. Consider the impact of each option on stakeholders, such as departing owners, family members, and employees.
5. Draft Legal Documents To Protect Interests Of All Involved Parties
Engage counsel to draft legal documents that will protect all parties involved in the business succession plan. These documents should provide clear guidance on how ownership and management responsibilities will be handled going forward.
6. Finalize Plan With Advisors and Executives
Once the team has identified options for implementing a business succession plan, it is important to finalize the details with advisors and executives who will be responsible for carrying out the plan. This includes discussing timelines for implementation and ensuring that everyone understands their roles and responsibilities in executing the plan.
7. Monitor Progress and Update As Needed
As the plan is implemented, it is important to monitor its progress and adjust as needed. This may include modifying timelines for implementation or adding new goals and objectives based on changes in the business environment.
8. Incorporate Strategic Planning Elements Into Succession Plan
The succession plan should be more than just an orderly transition from one generation to another; it should also incorporate strategic planning elements that will ensure the long-term success of the business. For example, consider how new technology could improve operational processes or how market trends might affect product offering decisions in the future.
9. Prepare a Business Valuation Report
Engage a professional to prepare a business valuation report that will provide insight into the value of the organization and inform decisions regarding succession planning. This is an important tool for assessing potential options and determining how much control departing owners should maintain during the transition.
10. Train Successors On Operational and Financial Aspects of the Business
Ensure that successors are properly trained on all aspects of running the business, including operational, financial, and governance procedures. This may include training on specific software or teaching them about industry regulations.