Succession Planning Basics

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The value and benefits of succession planning are reviewed.

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Succession Planning Basics

  1. 1. Succession Planning Basics Representing business owners world wide from Vancouver, Canada http://www.ck-globalsolutions.com/ +1 604 909-1271
  2. 2. Succession Planning Basics• Succession planning is a long-term process, not a one- time event. It is the process of formally determining who will take over your business and how that transition will occur.• Seemingly straightforward at first, succession planning involves many factors and can be a lengthy and complex process.• Minimizing transition risks involves adopting a clear and comprehensive succession plan years before it is needed.• Plan at least five years in advance to protect your business, your family and your capital. Representing business owners world wide from Vancouver, Canada Contactus@ck-globalsolutions.com +1 604 909-1271 http://www.ck-globalsolutions.com/
  3. 3. What Is At Stake• Without a succession plan, a business might fall into the hands of someone ill-prepared to run it.• Or you and your family might be forced to sell it for much less than it’s worth. That is, if it sells at all.• If you want to capitalize on your investment, whether by selling your business and/or handing it over to the next generation, putting a succession planning strategy in place now is one of the smartest things you can do. Representing business owners world wide from Vancouver, Canada Contactus@ck-globalsolutions.com +1 604 909-1271 http://www.ck-globalsolutions.com/
  4. 4. The Statistics Are Sobering• Only 30% of family-owned businesses survive the transition from founder to the next generation.• Only 10 per cent of small to medium sized businesses have a formal plan to sell, transfer or wind down their business in the future.• More than half of small to medium sized businesses do not have a succession plan at all. Representing business owners world wide from Vancouver, Canada Contactus@ck-globalsolutions.com +1 604 909-1271 http://www.ck-globalsolutions.com/
  5. 5. The Benefits of A Succession Plan• Helps the transition go smoothly and minimizes costs• Sets a timetable for transfer of ownership• Helps ensure the future financial stability and value of your business and your retirement capital• Reduces potential tax liabilities of transferring ownership and maximizes tax planning opportunities before its too late• Helps contribute to the growth of the business and add potential value to your net worth• Identifies retirement income levels needed to support your desired lifestyle• Family, business and estate financial needs are identified in the event of disability or premature death Representing business owners world wide from Vancouver, Canada Contactus@ck-globalsolutions.com +1 604 909-1271 http://www.ck-globalsolutions.com/
  6. 6. Succession Plan Development• Requires the services of professionals, typically including tax specialists, financial advisors, legal advisors and business advisors as well as internal stakeholders, such as family members, key managers, employees and successors• In addition to tax and legal considerations, others include: - Financing of the successor - Division of future profits after the transition - Identifying long-term personal and family goals - Communicating each stakeholder’s vision for thebusiness - Each individual’s role in the business after succession - A processes for selecting and training successor(s) Representing business owners world wide from Vancouver, Canada Contactus@ck-globalsolutions.com +1 604 909-1271 http://www.ck-globalsolutions.com/
  7. 7. Key Considerations• When are you going to retire?• How do you best capitalize on your capital investment?• Who is best suited to manage the business?• Are they capable of taking on these responsibilities?• Do they have the personality and ability to lead the company?• Who will replace your role?• Will you play any role in the business after you’ve retired?• How will ownership be transferred?• Will your business carry on?• Should it be sold outright instead? Representing business owners world wide from Vancouver, Canada Contactus@ck-globalsolutions.com +1 604 909-1271 http://www.ck-globalsolutions.com/
  8. 8. Good Communication Is Vital• An essential part of the succession planning is the need to openly discuss the issue of succession with family members, key managers and employees.• Failure to communicate is one of the biggest obstacles to a successful succession.• It can be a complex process and much depends on other people, but it starts with the owner of the business. Representing business owners world wide from Vancouver, Canada Contactus@ck-globalsolutions.com +1 604 909-1271 http://www.ck-globalsolutions.com/
  9. 9. Analyze Your Business• One of the most important aspects of your succession plan begins with the analysis of your business.• If your business has prospered, you‘ll need to understand why so that you can ensure it will continue to do so.• If your role has been critical to that prosperity, you need to consider how you can begin sharing your responsibilities with others in the company.• It is also important to plan for the possibility of death or disability or the loss of a partner and how this might affect the business. Representing business owners world wide from Vancouver, Canada Contactus@ck-globalsolutions.com +1 604 909-1271 http://www.ck-globalsolutions.com/
  10. 10. The Financial Picture• Review your company’s financial statements and evaluate the current net worth of your company.• This information will help set a realistic purchase price. It will also provide critical information to your successor.• You will most likely need a professional valuation. Taken together with your financial statements and budget projections, it helps provide a thorough financial picture of your company. Representing business owners world wide from Vancouver, Canada Contactus@ck-globalsolutions.com +1 604 909-1271 http://www.ck-globalsolutions.com/
  11. 11. Get Your Business In Order• If your business has suffered financially, or if there is too much debt and poor management, now is the time to address these issues.• Begin paying down debt. Look to replace or add staff and take time to find the best people to fill the positions.• Do what is necessary to optimize your company’s position long before you retire to help ensure a successful transition. Representing business owners world wide from Vancouver, Canada Contactus@ck-globalsolutions.com +1 604 909-1271 http://www.ck-globalsolutions.com/

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