Business Succession Planning

To look at the purpose of succession planning, consider these scenarios:

• The Managing Director suffers an illness or accident, and is unable to work for an extended period. Can the business continue to function without them? Are there staff trained up who are ready, willing and able to take over additional responsibilities – and carry them out competently, without loss of customer service or profitability?
• The Managing Director or CEO suddenly dies. However, the business needs to carry on trading – and do so profitably – as their families are reliant on the income, or wish to sell the business for as much money as possible.
• The business owner wishes to sell the business for maximum profits. To get the maximum selling price for the business, the business shouldn’t be reliant on the business owner. The best scenario is to have staff ready to step up and continue delivering profits to the new owner.

However, despite the importance of taking this approach, we find that succession planning in NZ is rarely carried out. Often this is because many business owners find it too difficult, or don’t know how to go about it.