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business succession plan

4 Key Things to Include in Your Business Succession Plan


Jul 14, 2019


Writing up your business succession plan is a lot like writing up your Will: a grim yet necessary task.

Drafting a will is sobering since it brings you face-to-face with the inevitability of your own death.

Almost as bad is drafting a plan in which you face the inevitable end of running the business that was once your passion and major focus in life.

Even if you currently have no plans to sell and retire or hand the reins over to someone else any time soon, it’s still wise to get your succession plan in place as soon as possible.

Just because, as with estate planning and Will drafting, you never know.

Having that succession plan done will give you peace of mind that your business will be in good hands and that you and your family will be set up for the next phase in your lives. It reduces many risks and frees you up to keep running your business or get started on your next life goal.

So let’s get started. Here are the four most basic elements of your succession plan which, according to the Australian Taxation Office (ATO), are essential to complete your plan.

Business Information

Your document should include a title page that lists all of your company’s vital details such as:

– Business name, logo and address

– Australian Business Number (ABN) or Australian Company Number (ACN)

– Current owners of the business

– Date your plan was prepared

– Table of contents for easy reference

Succession Section

This part is the real meat of the document. It’s where you detail your entire plan of choice for distributing your interests in the business when it comes time for you to move on.

In this section you’ll discuss exactly what kind of succession you have in mind, who will inherit your business and when and whether or not there are any restrictions to what they can do with your company.

Propose the kind of organisation and structure you want for your business in the next phase. Stipulate a plan for continuing the education and training of those left on your team. State how the responsibilities should continue to be carried out and by whom.

List items registered under your name that need to be changed with new ownership such as the ABN, intellectual property, permits and the name on the property lease.

The succession section should ideally include a list of legal documents that will be impacted by a transfer of ownership such as contracts, agreements and current insurance policies. Include a copy of your Will stating your wishes on how your shares and proceeds from the company are to be used after your passing.

Include a timetable for your succession plan so that everything happens exactly as you intended it to. The ATO also recommends including a contingency plan that details all the potential obstacles to carrying out your succession plan and a list of suggested solutions.

Finances Section

This part should detail all of the financial aspects of your succession plan. You should put in here a statement of what your business is currently worth along with buyout details and sale specifications. If there are retirement payments owed to anyone in your company, make sure that gets noted, as well.

Remember to include all of your company’s tax info, too!

Supporting Documentation

Now we come to the last, important section of your succession plan.

This is where you want to add in copies of all of the critical documents that pertain to your business. If a form or document is mentioned elsewhere in your plan, make sure there’s a copy here that can be referenced. Doing this will simplify the execution of your succession plan later on.

Some documents you may want to include are:

– Leases

– Business registrations and name certificate

– Tax registrations

– Insurance forms

– A market evaluation of your business

– Agreements

– Contracts

– The resumes of your potential successors

Make your succession plan a digital file that’s easier to update with changes than a hard copy. A digital copy can be accessed and the most current version printed out any time it’s needed.

Clearly, there’s a lot of thought and organisation that goes into arranging your succession plan. This is a challenging and time-consuming project so it’s understandable that you may feel overwhelmed.

There may even be many aspects unique to your own succession plan that weren’t covered here so you should definitely seek professional help in compiling your plan.

Work with expert advisers

The reality is, you can’t pull together a rock solid business succession plan without the support of your key advisers. This may include, at the very least, your accountant, financial planner and lawyer.

Your team will make sure you dot your i’s and cross your t’s, and don’t miss any vital information or instructions.

Get Advice

Ready to successfully set up your business succession?

Contact Nitschke Nancarrow, experts in all aspects of accounting, financial planning, investment and business. We operate in Adelaide, Sydney, Melbourne and throughout Australia. Managing partner Kym Nitschke is available for a free initial discussion about your situation. Call us on (08) 8379 9950 or send me an email.

– Kym Nitschke

The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s  interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.

Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.

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