Lesson 1, Topic 1
In Progress

8.3 Succession Planning

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A good succession plan will help make the transfer of a business go smoothly, and allow the entrepreneur to maintain good relationships with employees and business partners. Succession planning helps

  • Protect the legacy of
    • Maintain a service to your community
    • Build value for your business
    • Provide financial security for your family and your stakeholders
    • Deal with unexpected events (illness, accident or death)
    • Prepare for the future (Canada Business Network, 2013)
    your business

Business owners should begin their succession planning as soon as they are able because the process takes time and the decisions made now can affect the opportunities for achieving succession and exit strategy goals later. The process for succession planning should include the following considerations (Canada Business Network, 2013):

  • The owner should establish their goals for the business up to and post-retirement, including whet her they wants to retain an ownership interest in the company after stepping aside from the day-to-day operations of the
    • Decision-making processes should be established, especially for when or if the current business.

owner decidesto pass the business on to a successor.

  • Any potential successors should be trained in the business
    • The owner should prepare a good estate plan so that all income tax and financial factors and implications are considered.
    • The owner should have a contingency plan in place in case the original plans do not turn out asintended.
    • The owner should plan how to transfer the business, should valuate it, and should determine their exit strategy operations.