Business Succession planning: Leaving your business in capable hands
For many business owners, their company represents years of dedication, risk-taking, and hard-earned success. When the time comes to step away, ensuring that legacy continues is often a priority.
Whether passing the reins to a family member, a trusted colleague, or a key employee, business succession planning plays a vital role in securing the future of the business.
A well-prepared succession plan ensures that your business remains stable and successful when leadership changes hands, reducing disruption, maintaining employee and client confidence, and preserving the values and culture you’ve built over time.
What is business succession planning?
Business succession planning is the process of identifying and developing future leaders within a business. It provides a structured roadmap for how ownership and control will be passed on, whether that’s through retirement, sale, or unforeseen circumstances.
This isn’t a one-off event. It’s a long-term strategy that includes identifying successors, assessing training needs, and implementing contingency plans.
Our Edwards Accountants team provide invaluable guidance in shaping and reviewing your succession approach to suit your business goals.
Succession planning vs exit strategies: Understanding your options
Succession planning refers to the process of identifying and developing new leaders that can take the place of current leadership when they retire or exit the business.
An exit strategy is about preparing for the next stages of the business when the owner(s) want to leave or exit the business. Exit strategies include selling to a third party, a management buyout, passing onto family members, merging with another company, or closing operations entirely.
The benefits of succession planning include greater continuity, smoother transitions, and the ability to maintain company culture and client relationships. It offers reassurance that the business will remain in capable hands for those who place high value in the legacy they leave.
When should you start succession planning?
It’s never too early to start thinking about the future. Ideally, succession planning should begin 5–10 years before a planned exit. Ultimately, earlier planning allows greater flexibility, better training, and stronger decision-making.
Even if you’re not yet considering retirement or stepping back, having a plan in place protects the business in the event of unexpected circumstances and ensures the long-term resilience of your company.
Taking time to create a proactive plan
Reviewing and updating your plan regularly is just as important. Businesses evolve, and so should your succession strategy alongside it.
We recommend businesses create short and long-term strategies that include contingencies for unexpected events, such as illness or a sudden departure.
Rushing succession planning can lead to higher costs, poor transitions, and unnecessary stress. It can also limit opportunities for taxation efficient structuring.
Importantly, communication is key. Letting employees, stakeholders, and clients know what to expect reduces uncertainty and reinforces trust in the business’s direction. Keeping everyone informed can also help prevent internal conflict and ensure alignment.
Identify critical positions
The first part of succession planning should be to identify the positions where a successor is most needed. Business critical roles with no obvious successor pose the biggest risk to a company. These roles can extend beyond just senior leadership.
Once you’ve identified the positions that require a succession plan, you need to profile the role and look at the knowledge and skills needed by someone to replace that role.
The ideal successor may come from your internal pool of talent that is already in the company. Alternatively, when internal candidates are not ready or available for a role, external candidates may be needed to fill any skills gaps you may have or where a fresh perspective may be of benefit.
Having a combination of internal and external candidates as part of your succession plan may provide you with a more diverse pool of candidates. Taking a broad and inclusive approach to identifying future leaders can help ensure the right person steps into the role.
Internal succession candidates
Potential leaders aren’t always the most obvious candidates. Some of the best successors may already be part of your team, quietly demonstrating the skills and values needed to lead.
Succession planning is a chance to assess your team objectively, focusing on ability and potential rather than job title or personal ties. In some cases, a long-standing senior employee may be better equipped to take over than a relative or external hire.
Identifying internal successors can increase employee engagement and morale, reduce hiring costs, provide a quicker and smoother transition and improve company knowledge and retention.
External succession candidates
If you’ve considered all your internal successor options and none provides a sufficient solution, then it may be time to consider an external succession candidate.
An external candidate may bring the necessary skills and experience that you don’t have currently in the company. They can also offer a fresh perspective and a broader network.
However, external successors can come with additional challenges such as cost and time to recruit, integration challenges, cultural differences and the effects on employee morale.
Identifying training and development needs
A smooth handover relies not only on choosing the right person but on ensuring they are prepared. They must have the skills, experience, and commitment to take the business forward.
It’s worth investing time in professional development, either within the business or by gaining external experience. Treating all potential successors equally, regardless of their background or relationship to you, supports objective decision-making and long-term success.
For many business owners, letting go and passing on knowledge and responsibilities to their successor is often a key challenge. It’s imperative that you provide the right training and support to your successor while managing any personal issues you have around loss of control, trust, and the confidence to let go.
Supporting your business succession planning with expert advice
We understand how important succession is for your peace of mind. Our team of experienced accountants and advisors work with owners across multiple sectors to develop tailored succession strategies that support your goals, values, and long-term plans.
Whether you’re just starting to think about the future or are ready to put a detailed plan in place or looking for support with share option schemes, family investment companies, corporate taxation, or business restructuring, we’re here to help.
Contact Edwards Accountants today to explore how we can support your business through every stage of the succession journey.
