All established businesses, organisations, corporations, and institutions strive to live a life that can withstand the test of time, meaning that when one key figure leaves, another person should be ready to take up the mantle and run the show. That’s why succession planning is crucial, even for start-ups, since it’s responsible for securing your company’s future.
What is Succession Planning?
Just like the moniker suggests, succession planning refers to identifying future positions that would lead your business – from developing corporate leaders, managers, and other advanced roles that will impact your operations on the horizon.
What Planning Your Succession Entails
Planning a succession is a time-consuming process, one that every business needs to have a head-start on since it can take two years or more to develop. This is because the succession plan requires regular review and must be flexible enough to shift when the situation demands it. Choosing a successor generally falls under two paths:
- Family Succession Plan – this is the right choice for family businesses since it passes on the responsibility to family members, which you can do by setting up a trust fund, giving it as a gift, or selling it;
- Non-Family Succession Plan – this involves a process called management buyout, which involves selling the company to an employee or other owners;
Keep in mind that the most successful succession plan should involve key figures that are well-equipped for a leadership or managerial role. It should also tackle financial, legal, and operational challenges that will pop up once you leave the company to ensure the next owner can pick up the slack.
Crucial Factors to Consider in an Effective Succession Plan
When it comes to developing a fool-proof succession plan, it’s best to check off the following milestones:
- Identifying the ideal successor;
- Determine business housekeeping, such as the timetable for fixing financial obligations and legal requirements);
- Successor training;
- Transfer of responsibilities;
- Final handover;
Understanding the day-to-day influence of certain positions in a company can help you determine the important roles and responsibilities you need to include in the succession plan. Other questions that can help define your needs in a succession plan include the following:
- What are the operational issues that need to be addressed?
- When do you plan to retire?
- Will you have any semblance of involvement after you leave the organisation?
- What are the responsibilities of your successor?
- What are the training programs offered for your successor?
- What are the risks involved in the succession?
- What are the financial or legal issues that will come up with the succession plan?
The Bottom Line: The Importance of Succession Planning for the Future of Your Business
Without a succession plan, a company can suddenly lose its way and crumble in the event of a sudden loss of a vital team member. This puts businesses of every niche and scale at risk of weakening their competitive position, that’s why it pays – literally – to develop an effective succession plan for the sake of your company’s sustainability.
How can Our Springfield Solicitors Help with your Succession Planning?
If you’re looking for the best solicitors in Australia that specialise in property and business conveyancing, succession planning, family law, and more, our expert attorneys at Springfield Legals help get you through this tough time. Get in touch with us today and see what we can do for you to keep you on the side of the law!