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The Importance of Succession Planning

2019-05-10T21:05:23+10:00

There are many reasons you may decide to leave your business, ranging from a long-awaited retirement…

This article is published by Modoras Accounting (QLD) Pty Ltd V11022019

The Importance of Succession Planning

There are many reasons you may decide to leave your business, ranging from a long-awaited retirement, health forcing you to consider your options, or just wanting to take a break. Preparation and planning are important components of exiting your business when the time is right.

What is succession planning?
Succession planning is a process by which you start considering the ownership and/or management options for your business when you or a critical team member is looking to step down from their position. A succession plan is commonly done when you have a particular person in mind who will take over the business. This is often a family member, or it could be a long-term employee.

Document important information

Document important information.
A major part of succession planning is making sure the business remains profitable and operational without you there. This means information needs to be shared and documented in such a way that it can be used by anyone to recreate the way you conducted business. Documenting critical systems and processes needs to be done well in advance, so they are accurate and functional.

Sort out your finances.
Finances when leaving a business can be tricky to handle depending on how they have been managed previously. There may be a need to separate business finances from personal. There will also be a need to determine a sale price if the business is going to be purchased by the successor. Does your business structure entice or repel a prospective new owner?

Plan it and write it down.
There are many questions that go beyond the systems and finances. By thinking about them in advance, you’ll be better prepared when the time comes to walk out the door and hand your business over.

• Will you still maintain a role in the business?
• What is the time frame for the succession plan?
• Does your successor need any training or certification?
• Are there any taxes payable?

Make sure to get any future plans in writing.

Are you feeling overwhelmed? For a whole range of business advice, including succession planning, Modoras can help provide some clarification. Click here to get in contact.

IMPORTANT INFORMATION: This blog has been prepared by Modoras Accounting (QLD) Pty. Ltd. ABN 81 601 145 215. The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individual's personal circumstances have been taken into consideration for the preparation of this material. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Accounting (QLD) Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Accounting (QLD) Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Accounting (QLD) Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Accounting (QLD) Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication. Liability limited by a scheme approved under Professional Standards Legislation.

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