When you’re ready to move on to the next phase of your life, leaving your business behind can feel daunting. That’s where having the right succession plans come in to help both you and your team members make the transition seamlessly. Unlike the eponymous HBO show, succession can be handled smoothly and without drama if you have prepared in advance. However, almost 20% of business leaders surveyed by Robert Half said their business had no succession plan at all. So, let’s dive into why succession plans are important and what they can do for you.

Succession can refer to either replacing the top talent in your organization who are leaving or the sale of your business as an entrepreneur. If you as a business owner know you are ready to move on from your current business, creating a succession plan can help you determine and lay out the right timeline for your transition. This will give your team members a clear understanding of what’s to come and the ability to prepare for any major changes. Giving yourself enough time to address any changes and challenges can help your organization with maintaining cultural integrity, employee retention and understanding any financial impacts.

When planning for your exit, it’s important to have a complete and holistic view of your company’s finances, as well as your personal finances. Understanding your company’s finances will help you with determining what you might receive from a sale of your business, negotiating with potential buyers/investors and attracting top C-suite talent for replacement. This can include taking stock of your current and future cash flow, assets, customer base and more.

Whether you are selling your business to insiders within your company, a third party like a vendor, industry partner or VC fund, or even gifting your business to a family member, you’ll need a comprehensive plan in place. You’ll need to outline how the transaction will work financially, the terms of the transaction and how new management will operate after the transaction. This will coincide with a business continuity plan that details the day-to-day operational changes within the business. And finally, this should also be considered with your own personal wealth management and planning as selling your business can greatly impact your own finances, taxes and more.

Succession planning is imperative to the continued success of your business after a change in ownership or leadership. It is a worthwhile but often complicated endeavor and working with seasoned financial professionals can ease the stress of the transition by providing you with the most accurate, up-to-date financial information to inform your decisions. ClarkSilva offers virtual CFO services to aid in a wide variety of financial support for your business, including consulting on succession plans. If you have any questions, reach out to a team member today!