There must always be a plan in place for a good business to succeed its owners and its employees – simply because no one establishes a business and plans for it to operate a few years and fold up.
The most successful businesses are those that can be handed over to matured children of the owner or to major shareholders so that the business could be a perpetual concern that lasts for generations and centuries.
The following are the major components of a good business succession plan –
Established goals and objectives: The business sure has goals and objectives for his business when starting out, and these must be well articulated for the management team to handle in case of succession plans. This must include the retirement goals of the business owner and benefits accruable to his family members and major stakeholders at retirement.
Decision-making process: The succession business plan must take care of issues that could arise from family tussle related to the control and ownership of the business. To this end, both family members and stakeholders must be involved in decision-making processes as they relate to business inheritance, management and ownership issues.
Plan for potential successors: The succession business plan must address the choice of a potential successor or successors when the actual time arrives. To this end, the plan must take care of how to identify the successor, how he could be trained to fulfill his position, how necessary support could be drummed up for him, and how he could build on the original vision of the business owners.
Estate planning: The estate planning aspect of the succession business plan addresses issues that pertain to capital assets, fixed and liquid assets, taxation, retirement incomes, financial provisions for family members and noted stakeholders. To make this work, professional advisers such as lawyers, accountants, life insurance experts and estate analysts must be called in to help out.
Contingency plans: There must be a plan in place to take care of contingency events and other “what if” scenarios. What will happen in the sudden and unexpected death of the business owner and how will the management respond? How will the business respond in the case of fire outbreak at the warehouse or operations headquarters? What about product or staff scandals? The plan must draw upon what could happen and how these issues will be resolved when they do occur.
Other salient issues: Other salient issues that must be addressed in the succession business plan corporate structures and management transfer methods, business valuation needs, exit strategy for business owner and key stakeholders, and implementation and follow-up strategies for making the succession plan work out effectively without any hassles.