Putting together a succession plan should be high on the agenda for any business, but why is it so important?
It's not uncommon for companies to go through periods of change. They might be bought out, have a change of management or simply be sold on. In order to maximise the profits that you'll receive from the business – and ensure it's in the right hands – a succession plan is crucial.
Making these preparations as early as possible will ensure there is a clear process in place when the company and its assets are transferred. You will need to make financial, legal and operational considerations, so it's not something you can afford to leave until the last minute.
In fact, figures from the Queensland government suggest it could take as long as two years to put a thorough succession plan in place. Once the initial document has been composed, you will need to reassess it on a regular basis to ensure it stays in line with your most recent business needs.
Although most people like to think their business will change hands as and when they choose, there are situations when this won't be the case. If you were to suddenly become ill or pass away, a succession plan will make sure that your wishes are met. Enlisting the expertise of a commercial lawyer can help ensure all your requirements are formally outlined.
You generally have two options open to you – a family or non-family succession plan. This will depend on who you intend to inherit the business when you decide to no longer run it.
The ultimate aim is to make sure that disruption to the day-to-day running of your business is kept to a minimum, which is why you need to be as clear as possible when stating your intentions. Any ambiguity could create problems further down the line, which is why legal assistance is advisable.