Small Businesses play a significant and key role in the upliftment of any economy as they provide opportunities for entrepreneurs and create meaningful jobs with greater job satisfaction. Since small businesses also manage Income, Brand and Wealth it becomes important for small businesses to structure for holding and a manner for transition of wealth to wealth inheritors. It is also important for wealth creators to understand that Succession planning is a long term planning and therefore it is imperative for SME’s to start such a planning at the earliest.
WHAT IS SUCESSSION PLANNING?
Succession planning is a strategy for passing on leadership roles-often the ownership of a company to the wealth inheritor or employee.
CHECKLIST FOR SUCCESSION PLANNING:
- Start at the earliest.
- Succession Planning is an ongoing process as it can be influenced by external factors.
- It should be planned in a phased and deliberate manner.
- Conduct business valuation.
- The wealth creator shall engage with every individual of the family (those members who would have a direct effect from the succession planning and its implementation).
CONFLICT: UNDERSTANDING NATURE OF CONFLICT
- Difference in Perspective
- Fear of the unknown
- Too many advisers
- Small pool of potential successors
- Not aligned with End Goals
- Generational divides
An exit strategy is a strategic plan to sell his/her ownership of the business to an investor or another company. It is therefore important to establish an exit planning at an early stage of a business as it provide control over business and mitigates the risk of financial failure.
With an increase in the growth of small businesses and startups, the need for succession planning has also increased. With a plan in place, it would benefit the business from having experienced wealth inheritors ready to take on new responsibilities. It would also help maintain business security, eliminate confusion, Preserve Brand Identity and Reduce Expenses.