By Peter Berekally

Business succession planning is a crucial yet often overlooked aspect of business management. It involves establishing a clear and well-considered strategy for transitioning ownership and control of a company to a successor, whether due to retirement, disability, or death.

Succession planning ensures the continuation of a company’s operations, preserves its value and prevents a chaotic scramble for control in the event of unforeseen circumstances.

The Importance of Business Succession Planning

A well-structured succession plan is vital for the long-term sustainability and success of a company. It provides a roadmap for the smooth transfer of leadership and responsibilities to a designated successor, ensuring the company’s continued growth and minimizing disruptions to operations.

Additionally, succession planning helps maintain the confidence of employees, suppliers, customers, and investors by demonstrating the company’s commitment to stability and forward thinking.

Without a succession plan, a company’s future can be jeopardized by the sudden loss of a key leader.

For example, consider a sole director of a company who unexpectedly passes away. In this scenario, the absence of a succession plan can leave the company and its personnel without the authority to make critical decisions or carry out essential tasks. Further bank accounts can be frozen leaving employees and suppliers unpaid for significant periods of time.  As a result, the company may suffer severe financial losses and even risk collapse.

Additionally, a lack of succession planning can lead to legal disputes and power struggles among potential successors, causing further damage to the company’s reputation and operations.

Call to Action

Business owners should develop a comprehensive succession plan, outlining the transfer of ownership and control to a successor, as well as the roles and responsibilities of an executor. By doing so, they can safeguard their company’s future and protect the interests of employees, suppliers, customers, and investors.

With that in mind consider the following:

1. Do I have a succession plan in place, if so, does it need updating?
2. Have I identified key staff to ensure continuity of business operations if I become incapacitated or pass away, do they have the authority to act (i.e. effect payroll, pay creditors/suppliers, etc)?
3. Do I have current estate planning documents (i.e. a legal will, advance care directive and enduring power of attorney)?

For advice regarding succession and business planning please contact Peter Berekally.

For advice regarding estate planning, please contact Robyn Nayda.