Succession Planning Is Not Just A Collection Of Buzzwords

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Succession Planning

Written by: Adam Ramage l Accounting Team


Succession Planning is not just a collection of buzzwords.  Done properly, succession planning adds value to your business, keeps stakeholders informed and allows your business to succeed beyond today.

There are a number of key components to a succession plan, and your business will have its own unique components that need to be considered individually and as a whole.

Critically, it should deal with the key members of your business, and what would happen if one of those, including yourself, was to suddenly not be able to fulfil their current role.  This could be through a team member leaving your business, a key team member wanting “part of the action”, the impact of the D words (death, disability, divorce) or simply, you decide you want to sell!

Your Succession Plan + What Should a Succession Plan Involve?

  1. Know what your business is worth to you and to other stakeholders.  This could be based on the assets alone or the profits your business generates and is something that can be calculated.
  2. Having your business “sale ready”.  You may have no intention of selling your business, but having your records, systems, and documentation in place can assist in demonstrating value to a potential purchaser.
  3. Having a personnel plan if something significant were to happen with a key team member, including yourself.
  4. Understanding the risks to your business from a financial, systems or documentation Suviewpoint, and consider how such risks can be managed or minimised.
  5. Identifying options within your team for future leaders/stakeholders/investors.
  6. If you have an exit timeframe for yourself, this should be worked towards with action steps to the outcomes of any succession are maximised for existing stakeholders.
  7. Communication of the plan to those key stakeholders.  Leadership should be aware of the plan, and understand the key components and actions.
  8. Protecting your brand.  All the work that has gone into your business “brand” should be protected before, during, and after a succession event.  Be that sale, a new key team member, or new equity participants, your brand should continue to reflect your business.
  9. Family businesses will also benefit from planning for succession.  Intergenerational change can be challenging, but communicating the objectives of each family member provides clarity and certainty and this can ensure value exists beyond the current generations of business owners.

So, Some Questions For You To Consider For Your Succession Planning Template

  • Do you know what your business is worth?
  • Who are the stakeholders you should be communicating with regarding the plan?
  • What are the key risks to your business today?
  • What existing plans do you have should a key event occur?
  • What triggers exist today for enacting succession?

So, with all of that in mind… how can we help with Business Succession Planning?

As a multi-disciplinary firm, Canny Group is well-placed to assist you with your overall plan, but more importantly, there are specifics that can add value to your plan

  • Business Valuation

Our accounting team can work with you to determine the value of your business, including the use of valuation methodologies that take into account current “market multiples”, considering the value of your “hard assets” (property, plant and equipment), and also the value of your intangible assets (goodwill, patents).

Importantly, the other matters below can build the case for your business value to be as strong as possible…

  • Documentation

Our legal team can work with you on shareholder and/or partnership agreements which should include buy-sell to provide clarity on how a transfer of ownership can occur.  If you have a business property and you need to put a lease in place, then that should be part of your succession plan documentation.

  • Finance

Our team can work with you on all things finance.!  Ensuring you maximise the after-tax proceeds from a sale, supporting a team member to take an equity stake, and dealing with how succession proceeds may integrate with your retirement planning, can be done under the Canny Group roof with the help of our advisory team working with our accounting and legal teams.

  • Sale Ready

Are there actions you should take in the short term to get your business sale-ready?  We can assist to identify and implement changes to your systems and structure to ensure your business is sale-ready.

  • Team

Your team are key to your business.  Ensuring they have clear roles, documented employment agreements, and guidelines on how they could be part of your succession will add value and create certainty for your team.  This can significantly improve retention with those key members.  Our team can help you put this in place.

  • Family Succession

We love working with families to achieve intergenerational business succession.  From meeting with family members together and separately, we help identify key issues and challenges, then work on strategies to reduce the challenges in workable steps.

  • Timing

Although there may be sudden impacts that a well-designed succession plan can assist with, your succession plan should also consider your “ideal timing”.  Influences inside and outside of the business can impact your ideal timing and we can work with you to determine what key action steps are time dependant or time-critical.

Importantly, your business is not the same as another.  Each business and family will have matters that are crucial to positive outcomes in the succession plan and its implementation.  Our experience and breadth of services ensure that we first identify and then plan for each of these matters with you.

We would also recommend that although succession planning may form be seen as part of your estate planning, the focus of succession planning should be on the ongoing success of the business or the successful realisation of the business value to the stakeholders.  This success should be seen as independent of estate planning, notwithstanding that “proceeds” from succession can then form part of your estate planning.

They say that failing to plan is planning to fail, but that would be focused on the negative.  We want to work with our business owners, including family members, to ensure positive outcomes for all stakeholders.  The only negative element we do highlight is that without planning, your business succession outcomes are less likely to be optimised.

Canny Group are the Accountants Geelong trust for your Succession Plan

Workable, understandable, and documented!  These are the benchmark characteristics your succession plan should have to maximise its value and the likelihood of a positive result for all stakeholders.  As simple as it can be, yet as complex as it needs to be for your business.

Your succession plan at its core is planning for your success.

Get in touch with our team today to start the conversation about your business and planning for your business exit.  Our team are here to help you to plan for your future – however you envisage yours we are here to help.

It’s your business and your plan and we are here to help bring that plan to life to ensure that you are giving yourself the best opportunity possible.

Senior Business Adviser and Senior Accountant Adam Ramage in the centre of the picture wearing a dark blue suit jacket with a light purple coloured shirt with the top button open

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