As a general definition, succession planning is the process of preparing to hand over control. Specifically, business succession planning is the process of preparing to hand over control of the business to others in a way that is the least disruptive to the business’s operations and value.
This last clause of this succession planning definition is the reason why having a formal, written succession plan is so important.
However, according to research done by the Canadian Federation of Independent Business (CFIB), only 10 percent of SME owners have a formal, written succession plan, 38 percent have an informal, unwritten plan and 52 percent do not have any succession plan at all.
With the huge numbers of baby boomers soon retiring, the organization considers this lack of succession planning to be the single biggest issue facing the SME community.
There are three main succession planning issues to be considered:
- Management
- Ownership
- Taxes
My article, Family Business Succession Planning, discusses these and provides succession planning tips.
To be successful, business succession planning should be started as early as possible. Five years in advance is good, but ten years in advance is even better when it comes to preparing a smooth transition.
