Introduction

 

As previously discussed in this Knowledge Base, a succession plan is a dynamic and comprehensive document which helps to manage the transition of a business by providing a detailed, strategic approach.¹ It is envisaged that completing a succession plan early will assist the business owner in passing on a healthy business and address the many issues that arise during the succession process.

 

After evaluating the current level of preparedness and the setting of goals, the next stage in the succession planning process for the business owner is to plan their strategy. It is at this stage of the process that the key decision of the whole succession planning process must be made; that is, whether the business owner wishes to exit from the leadership or daily running of the business, or whether they wish to exit entirely from the business, including its ownership.

 

The choice made will determine how the business owner proceeds through the succession planning process and what considerations they will need to have addressed as part of the succession plan. As such, it is very important that the business owner takes the time to consider in detail the consequences of a decision under either stream, the impact this decision has on their goals, and the impact this decision will have on all stakeholders who may be affected (either directly or indirectly) by the succession planning process.

 

Please note that a third option is also possible  – namely, the option of retiring partly from leadership and selling down only part of the stake in the business. However, for the purposes of this Knowledge Base, it is assumed that a decision has been made on only either of the first two options. Should the business owner wish to undertake this third succession strategy, the key topics of this Knowledge Base under both Changing Leadership and Exiting from Ownership should be reviewed.