Business Succession Planning

Planning to exit?  What's your exit plan?

Surveys and studies on Succession Planning suggest that although many business owners plan to exit their business in the not too distant future, very few have committed to a structured planning process to increase chances of transition success.

Succession Planning is about making the best available choices from all available alternatives. To achieve success in this regard requires a commitment to identify alternatives, make choices, and implement plans to achieve the predetermined goals and objectives of all involved.

Who will lead? Will former leaders agree to follow?

It is critical to make sure there are capable and qualified people to take over key leadership positions within a business, recognizing that:

  • Those potential leaders firstly have to be identified
  • There needs to be a well thought out transition plan
  • Leadership responsibilities will be willingly given up by the leadership predecessors
  • Those leadership challenges and responsibilities will be willingly assumed by the leadership successors.

But where is the business going?

Before dealing with the people side of the leadership transition plan, the involved parties must come together and agree on a plan for the future direction of the business.

Respect for those stepping down

Of equal importance to the issues surrounding who steps up, who steps down, and how they go about it, are aspects of a Succession Plan related to the financial and emotional security and well-being of those that are about to give up control, leadership and ownership.

Leadership . . . what are the rewards for success?

In the well crafted Succession Plan, those that step up and assume leadership roles need to be respected for their willingness to do so, and amongst other things, need to be properly compensated for the roles they are going to play as next-generation leaders.

Family complications

In the case of succession involving a family owned business, the Succession Planning process also serves to help establish the roles, rights and obligations of participating family members, through the transition and on into the future. Family members have different responsibilities in their capacity in some or all of the roles of an employee, an owner, and/or a business leader, that need to be considered and addressed.

What is a Succession Plan?

The following outline covers the major components of a well designed Succession Plan. There is no one right way to attack this important process, made up of several complex parts, but an effective and efficient Succession Plan likely involves the following:

  • A commitment to get started
  • Outside assistance for process and technical aspects (facilitation, legal, financial, taxation, etc.)
  • Dedication of time and resources to the initiative
  • A concentrated effort to get everyone involved
  • Communication, communication, and more communication


In the end, the Succession Plan is an interwoven mosaic of careful analysis, discussion and conclusions including a commitment to implement the necessary actions and changes to accomplish the stated goals.

An effective succession requires:

  • Clearly articulated and widely understood individual personal and financial goals and objectives for all involved.
  • Mutual agreement on a specific growth strategy for the business, including the what, when, how, and who of implementing the agreed upon growth strategy.
  • Consideration of issues involved with any overlay of family dynamics, and implementation of specific actions to deal with sensitive issues.
  • Clear identification of possible future leaders, with roles, responsibilities and rewards for those that assume leadership positions understood and agreed to by all.
  • Willingness of the predecessor leaders and owners to step down, but yet still contribute in an additive way to the success of the business.
  • Critical attention to important technical aspects of legal structures, business agreements, taxation issues, financial and wealth planning matters, and the other framework pieces that need to be in place to successfully implement a Succession Plan and successfully carry on the business.

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