What is succession planning? A small business guide


Succession planning model

Establish a timeline

It’s a good idea to keep in mind how quickly you’re looking to find a successor. Your timeline will influence your priorities, from the cost you’re hoping to get from selling to the essential skills you’re looking for in a successor.

Value your business

Whether you’re selling your company or just stepping back from managing the day-to-day, it’s a good idea to value the business during negotiations. There’s lots to consider when valuing a business – our business valuation guide can help here.

Name your successor

Once you’ve identified who’s taking over, you’ll need to document this and start communicating to any employees, shareholders, and suppliers.

File key documents and policies

Of course there’s always going to be some business admin associated with handing over control of your business. From employee contracts to legal certificates and licences, make sure these are in the right hands.

Update your business insurance

If your business changes, it’s important to make sure you’ve still got the cover you need. For example, if the business insurance policy is in your name you’ll need to inform your insurer with key contact information when you step down.

Succession planning examples

Let’s say you’re a restaurant owner and you run the business in partnership with your brother.

You both have different skills. His friendly customer service keeps the diners happy, while you keep a close eye on profit and marketing strategy. You’re also the one who holds the personal alcohol licence for the premises.

When you unexpectedly need to step down from your responsibilities due to health reasons, this leaves a gap in the management structure.

With a succession plan in place, your brother will be clear on the skills and responsibilities he needs to manage without you. He’ll also need to apply to transfer the premises licence to himself or a new partner.

Free resources for small businesses

Our Knowledge centre has plenty of information to help you with running your business and preparing for the future, including:

Have you got a succession plan for your business? Let us know in the comments.

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