Are You Prepared To Pass On The Torch: Succession Planning

While we always all see the brighter side of life and always wish & anticipate prosperity in business. We tend to miss out and be prepared for the eventualities in life. As human beings, we cannot ignore the fact that we are mortal.

Many hard-earned businesses go for a toss, just because they don’t have succession planning in place. Apart from the banks and insurance, there are many other assets a person earns in a lifetime and tries to keep it for himself. All will go unnoticed and not useful for the family members & society if it is not made available to the successor.

Business succession planning is a series of logistical and financial decisions about who will take over your business upon retirement, death, or disability. To write a succession plan, the first step is to identify the ideal successor to take over the business, then determine the method for changing ownership in case of an eventuality.

You have spent your life building a business that you are proud of. As you reflect on your next phase, you want to leave a thriving business for the next generation.

With a generation of business owners aging into their retirement years, it is increasingly important for these planning conversations to take place. A recent study showed that 51 percent of small-business owners are over the age of 50. Another study found that 58 percent of business owners do not have a specific succession plan in place.

What is Succession Planning

In today’s uncertain world, the Unclaimed Deposits with Banks and Insurers in India itself is piling up. A huge amount of money is lying in the Banks and insurers all over the world, as the people diseased, did not create proper documentation of legal heir for transferring the assets and wealth they have created.

It is of utmost importance to safeguard wealth more than the earning. Corporate companies call it Corporate Governance and they bring all control measures under the process and systems. Hence, corporate not really affected by this. But, How about small business owners?

Have a simple process in place in case of an emergency. As we do not know what happens in the uncertain world.

Think that you are going to go away from business suddenly for 6 months Holiday or World tour. What would you prepare as a handing over? To whom you will handover? Imagine that you don’t work on holidays?

Think of all worst situations and create a wall to protect your business and your family.

Have you done your Succession Planning?

· Keep all Passwords accessible to second Person (reliable) or Spouse

· As you know human memory cannot play the same role as you grow older, it is very important to document everything and your successor needs to be aware of everything.

· Start organizing files for each activity with the names/phone numbers of the relevant people you deal with.

· Do not rely 100% on Mobile phones, as phones go missing or broken and you may not have access to the data

· Many times phone Passwords and Lap Top passwords are not know to the close relatives or successor, Hence, In case of emergency no one has access to the details stored in these instruments

· Prepare a Will or Legal Document if required and also have preferred nominee in the bank transactions

· Take a key man insurance, if you are a business owner and other insurances such as Term Life, Medical etc. as required

· Inform the nominee about the insurances and contact details of the persons in the insurance companies for future reference in case required. Allow them to have copies of all the policies and access to the originals as well.

· Share all your bank accounts and details with the trustable person you have. Let them have access to your passwords as well.

· Give a General Power of attorney to the trusted successor to handle things on your absence, in case of any emergency.

· Have a dedicated family lawyer who can come in handy when there is a need arises.

· Always keep saving an emergency fund that no one is aware of. It can help you when you need it.

· Keep all documents regarding wealth and all assets in an organized manner and in a safety locker

· Seek Financial Advice, if needed for the deployment of funds for diversification and major investments.

· Training of successor is very important to handle things you have been dealing with.

Your five-year business succession planning checklist!

A succession planning strategy is more than just identifying a successor. ... Start planning early: Five years in advance is good, but 10 years in advance is better.

· Set specific, long-term goals for ownership

· Establish a set of managerial competencies. ... to handle

· Identify the successors

· Evaluate your successor and train

· Timely communication to a successor first

· Establish what and when

· Be Realistic

· Do what's best for the business & family

· Balance transparency with confidentiality

· Involve family members in discussions

· Get outside help: from Lawyers, accountants, financial advisers

· Create a robust Success Planning Process

· Regularly review the succession plan

Please click the Link Live Plan for doing the Live Plan Cloud-Based Tool best suitable for Small Business Owners.

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