Ending your business is the last thing most entrepreneurs want to think about. But succession planning (or planning to leave your business) is important to do ahead of time. Think of succession as planning for the transfer of knowledge, skills, labour, management, control, and ownership between the founder (retiring owner) and the successor (new owner). Create a succession plan, just like you created a business plan when you started.
Your succession options
Find the exit strategy that's the best fit for your business and situation. Three common options for exiting a business are:
- Passing the business on to a successor
- Having managers or employees take over ownership
- Selling the business to a third party
Your succession plan should have:
- Definition of the distribution of ownership
- Profile of the new leader or leaders
- How the new leaders will be trained for their roles
- Definition of key roles of the business during the transition
- Mechanics for the purchase or sale of stakes in business
- Taxation and legal considerations
- Financial considerations
- Retirement considerations
- A procedure for monitoring the process and dealing with disputes and problems
- A timetable
For more information on succession planning
- Canada Business Network's information on succession planning will help you define the value of your business, understand the legal, financial, and tax implications of succession, and get help from professionals.
- Alberta Learning and Information Services has a detailed guide to succession planning for small businesses that will help you take care of every aspect of your succession plan and exit strategy.
- Business Development Bank of Canada's information on changing ownership can help you create a succession plan, sell your business, or hand over ownership to a family member.
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