Even for the most responsible and experienced business leaders in Australia, succession planning is a topic that few want to face. It doesn't matter whether they've been CEO for only a couple of years or have built the enterprise from the ground up; letting go is often tricky.
Of course, this is where solid succession planning comes into play. By being proactive and preparing well for a change at the top, you give the rest of the business the best opportunity to seamlessly carry on as normal.
So, what do you need to know about business succession?
You're not alone in this process
As more of the baby-boomer generation edges towards retirement, succession planning will be a hot topic of conversation. Only 14 per cent of directors, however, have a detailed board succession plan in place, recent statistics from KPMG reveal.
This is particularly concerning because succession planning is one of the most challenging experiences that a business leader can face – how can the next generation take over the enterprise if there is no structure or direction to follow?
In relation to family businesses in particular, KPMG Enterprise Partner Dominic Pelligana explained what the objective of succession planning should be.
"The goal is to have an orderly transfer of management, control, ownership and equity from one generation of the family to the next, whilst acting in the best interests of the business and the family," he said.
How to prepare for business succession?
"Everyone may know the founder, but you need to start thinking about what happens to key relationships, and who will manage them if the founder is not there."
Simple – planning is key. You want to be in a position where everything is covered and you're not required to return to the business time and time again to explain how things are done. This includes insight into financial structures, employee information, training and development, suppliers – the bulk of information that you've collected over the years.
"Everyone may know the founder, but you need to start thinking about what happens to key relationships, and who will manage them if the founder is not there," Mr Pelligana said.
How can Oncore Services support succession planning?
There's never really a bad time to start succession planning, though experts suggest around five to ten years before a change would occur is wise. To ensure that the process meets common legal obligations, get in touch with Oncore Services. We can oversee a succession and address any legal matters that arise.
For more information on what you need to understand about succession planning, reach out to our team today.