The succession section of your plan

Your succession plan is the main section of your plan and should cover detailed information about your business and planned succession. When considering succession planning for when you sell your business, there are a number of things to think about.

Business & succession details

Under the business and succession details section of your plan, include the following information:

  • Business name registration in your state/territory - Enter your registered business name.
  • Business structure - Enter whether you're a sole trader, partnership, trust or company.
  • Current owner(s) covered - List the current business owners who are covered by this succession plan. Include whether this plan applies to all partners.
  • Planned succession type - Detail the type of succession you have planned. Detail also whether you'll be completely removed from the business or only partially. If it's a partial succession, detail your future involvement in the business.
  • Successor details - When changing ownership there are quite a few things to consider. Enter the details of your successor and an alternative successor. Include their names and whether they're a family member, business partner or someone you'll need to recruit. Detail how and when you'll communicate your plan to the organisation.
  • Succession timeframe - Detail when you plan to implement this succession.
  • Restrictions - Enter any restrictions placed on the succession or successor. For example, if you choose a partial succession and want to retain some control of the business, you may place restrictions on your successor for financial or branding decisions. These restrictions should only be a summary of any formal agreement you have drawn up with your potential successors.

Proposed organisation structure

Briefly outline what the organisation might look like once you leave. Enter the name of your successor. If they're a current employee, also outline who will fill their current position. Outline any positions that will be vacant after the reshuffle.

Key personnel changes

Under the key personnel changes section of your succession plan, list all of the positions in the organisation and the people that are expected to fill the position in the event of a succession. For each position enter the following:

  • Job title - Enter the job title for each position. For example, owner / manager.
  • Name - If known, enter the name of the employee expected to fill the position. If unknown, add 'vacant'.
  • Skills required - Enter any skills, experience or qualifications required to take on the position. For example, relevant qualifications and/or experience in running a business. For more information look at hiring staff.
  • Training required - Enter any training this person will require to fulfil their new role. For example, on the job coaching and formal training in financial management. Read about available training and initiatives to support staff learning.

Skill retention strategies

Training is an essential part of the skill retention strategy for your business. Detail the procedural documentation you'll provide to ensure the skills of staff are maintained. If you have an appropriate allocation of responsibilities, detail how the new responsibilities will be documented and communicated to staff. Also outline the internal processes you'll implement to regularly check that the current skills of staff members are still appropriate for the business.

Training programs

Outline the training programs you'll be organising for possible successors. Detail whether these will be in-house or conducted by external providers. You may also like to consider change management training for the organisation in preparation for the succession.

Registration changes

Under the registration details section of your succession plan include the following information:

  • Registration transfer - List the business registrations you'll need to transfer or change. For example, business name, Australian Business Number (ABN), Australian Company Number (ACN), Goods and Services Tax (GST), intellectual property, domain name, local licences and permits. Read more about changing business ownership and notifying changes to your business to ensure a smooth transfer.
  • Change of business structure - Detail whether you need to change your business structure after the succession is complete. For example, if the business is currently a partnership, the new structure may be a sole trader. Read the relevant sections about notifying changes to your business.
  • Other transfers - List any other transfers or amendments that need to take place. For example, changes to lease, memberships or other documentation.

Legal considerations

Under the legal considerations section of your succession plan include the following information:

  • Contracts & legal documents - Detail whether there is a legal document that dictates the terms of the succession and describe the terms. Also list any contracts that need to be drawn up or modified in the event of the succession - for example, a partnership contract. Attach copies of any relevant documents to the back of your plan.
  • Buy-sell agreement - If you're in a partnership and you have a buy-sell agreement in place, describe the terms. Detail whether your partnership share will be sold to the remaining partners or open to family members or external investors. Specify whether this arrangement applies to all partners in the organisation.
  • Will and testament - For each business owner, specify whether they have drawn up a will and testament. If they have, detail what happens to the business or their share of the business in the event of their death.

To get more information on the legal aspects of your succession plan, visit the small business legal help page on the Australian Small Business and Family Enterprise Ombudsman website.

Insurance

For each business owner, list any insurance policies they currently hold in the event of a disability, death or injury.

Succession timetable

Under the succession timetable section of your plan, detail each phase of the succession process. For each phase include the following:

  • Phase - Enter a brief phase description.
  • Succession action items - List the succession action items that you need to complete for this particular phase.
  • Start date - Enter the date you expect to start this phase.
  • End date - Enter the date you expect to complete this phase.

Contingency or risk management

Under the succession timetable section of your plan, detail the risks to the succession and any contingencies you'll have in place. For example, detail what will happen in the event the sale price you expect is not met. For each risk include the following:

  • Succession risk - List the things that can go wrong while the succession plan is being implemented. Also detail the potential impact to your business.
  • Likelihood - Rate the likelihood of this risk occurring. For example, Highly Unlikely, Unlikely, Likely, or Highly Likely.
  • Impact - Rate the impact on your business if this risk occurs. For example High, Medium, or Low.
  • Contingency - Detail your contingency or alternative plan in the event that this risk occurs.

Read more about risk management plans.

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