What is succession planning in business?

Are you considering retiring or leaving your business to a family member or business partner? Cue, company succession planning.

With the right corporate succession plan in place, you can help prevent disruption to the everyday running of the business and encourage continued success long after you’ve left.

Keen to find out more about corporate succession planning?

Simply carry on reading to learn more about the purpose, importance, and stages of business succession planning from the experienced lawyers at Wilson Browne Solicitors.

What is business succession planning?

The process of business succession planning refers to identifying business-critical positions within the company and creating a plan that ensures a smooth transition when the individual occupying that role leaves, retires, changes roles, or even sells the business.

While the development of a corporate succession plan is usually reserved for more senior positions like CEOs, founders, and directors, it can be used to prepare for the exit of any employee.

Company succession planning can involve training existing employees with leadership potential to assume this vacant role or looking outside the organisation to fill the position.

Why is succession planning important in business?

The main purpose of succession planning in business is to streamline the transition in ownership or leadership. While some exits from the company can be planned for (such as a CEO stepping down from running the business), others can occur unexpectedly and without warning.

For example, if an individual decides to leave the company suddenly or is hit by a long-term illness that prevents them from working.

Without a clear corporate succession plan, your business could become more vulnerable to disasters and suffer from a lack of leadership for a period.

Conversely, some important benefits of business succession planning can include a smoother and faster change in ownership or leadership, greater employee training and development opportunities, a stronger brand identity, and a degree of future-proofing.

Why is it important to plan for succession in a family firm?

Succession planning for family-run companies can be particularly important, but also challenging. This is because the senior positions in the company are often occupied by family members who are likely related to several potential successors.

Emotional issues, confusion over successors, and a lack of communication can often make business succession planning far more complicated for family-run businesses. A clear Will, Trust, or buy-sell agreement on top of a well-executed corporate succession plan can clear the confusion and ensure a seamless transition.

What are the four stages of succession planning?

To help you understand the process of creating a comprehensive and effective corporate succession plan, our expert solicitors have explained the four key stages of business succession planning below.

Highlight business-critical roles

First and foremost, you need to identify which roles require a corporate succession plan. The chosen positions should be roles that are critical to the everyday running and success of the company.

Identify potential successors

Once you know which roles require a successor, you can begin the search for successors either within or outside the business. If you’re willing to train and develop existing employees and can see potential, it might save time and money to promote internally.

Alternatively, if the owner of a company wishes to sell the business, they will need to look for a suitable buyer and create an appropriate corporate succession plan.

Create an effective plan

With a potential successor (or two) lined up, you can get to the heart of company succession planning. This will involve determining what is needed to make the transition from one individual to another as smooth as possible.

For a smooth change in ownership or leadership, it may be necessary to develop a bespoke employee training plan, contact a solicitor to draw up a sales agreement or discuss your plans with family members if you’re part of a family firm.

Monitor the transition

After the transition has taken place, you will need to monitor the change to ensure the successor can handle their new role. While every individual will have a different approach to running a business or managing employees, a good corporate succession plan should limit workplace disruption.

How Wilson Browne can help your business with succession planning

If you require expert support with creating and carrying out your corporate succession plan, feel free to contact the experienced team of company and commercial solicitors at Wilson Browne.

Pragmatic, efficient, and highly knowledgeable, we can help you with a wide range of succession planning services.

To support clients across the UK with clear and professional company succession planning, we’ve set up offices in Northamptonshire and Leicestershire. However, our team can also travel to a more convenient location, closer to your organisation, if desired.

If you want to ensure that your business succeeds when you decide to retire or simply take a step away from the day-to-day running of the business, corporate succession planning is essential. To learn more about how having a corporate succession plan can benefit your business, please don’t hesitate to contact our team today.

You can always get in touch by simply giving us a call on 0800 088 6004 or by filling in our handy online contact form.