Components of A Good Business Succession Plan

Sample Succession Business Plan Template (Examples)

A good business succession plan is a business plan that helps businesses go smoothly and also helps relationship between the owner, employees and business partners go smoothly. The main reason for succession plan is to prepare the business and its strength for future purpose and requirements.

It also helps in maximizing your business values. A good business succession plan helps a business in several ways such as:

• It helps the business owner to prepare for the future of the business.
• It secures stakeholders financially.
• It builds value for the business and also protects its legacy.
• It helps to cover unexpected things like accident, death, etc.
• It helps individuals within the organization [employees] to know their goals and aspirations career-wise.
• It also helps to stabilize leadership and other key positions within the organization.

Here are the components of a good business succession plan:

(1) Successor

A good business succession plan includes information about who the successor(s) is/are. It is possible to have more than one person interested in becoming the successor and he or she is ready to take responsibilities so you need to identify who your successor is, the training required and other details about succeeding a business.

It also includes the skills, competencies and training required of a successor to the business.

(2) Job Requirements

A succession plan includes; the requirements needed to be an employee, the skills and attributes required to pick potential candidates for check listing.

(3) Aims and Objectives

Another component of a good business succession plan is the business aims and objectives, it includes the goals the business and its owner wants to achieve as the business moves forward and also the expectations of the business owner from his or her employees.

(4) Financial Plan

This is one important component when deciding on a business succession plan. That is, the finance you need and the tax you will pay during your business transition.

(5) Positions that Require Succession Plan

Most times, key positions in businesses need one succession plan or the other, an example is the chief staff officer. This position and other positions similar to it need succession plans which are components of a good succession plan.

(6) Organizational Chart

An organizational chart includes the details of all employees working under the business owner and their career paths. It also includes the names of employees and the position they hold.

(7) Buy-sell Agreement

Another component is a buy-sell agreement which is a legal agreement between the business owner and his/her partners or co-owners. The agreement make it possible to know what will happen if the business owner leaves or dies, who can buy his or her shares and at what price can the share be sold.

(8) Considerations

A good business succession plan includes considerations of the business needs and its journey, that is, what the business needs to operate in promoting trust, communication and harmony and journey in terms of how it will be managed, governed, controlled and directed over short or long term.

There is no strict rule about what a succession business plan includes, it all depends on the type of business and its owners. You might even decide to include details about the successor, your family members, business restrictions, legal and financial considerations, communication strategy, management of risk, succession type which can be partial or full succession, marketing strategy, and so on.

Even if your business has matured, succeed, evolved and famous, you still need to have a business succession plan, it is paramount for a business to be good. If you want your business to be endure all things it faces, monetize your value and create a lasting legacy, you need a business succession plan that is good and effective.

In writing a good business succession plan, there are two things you should put into consideration which are:

• Your Vision: You need to put your vision into consideration in the sense that do you understand what you want to do and do you where exactly you are starting from. You should have a clear vision of these things, they are very important, you should be able to differentiate between professional and personal goals and understand them clearly.

• Your Business Value:
Another thing to consider when writing a good business succession plan is the value of your business which is mostly determined by the cash flow. Cash flow is the simplest way you can use to determine the value of your business. You can also hire valuation specialists to help in determining your business value.

• Your Business Efficiency: You need to consider if your business is efficient enough to create a good business succession plan for it. If it is not efficient enough then you need to first improve on your business efficiency before making the business succession plan you are about to make, this is not compulsory but necessary for your business. You might also need to maximize your value, scale and growth.

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