Business Succession Planning

Succession planning protects the sustainability of a business, as well as its stakeholders’ financial prosperity. It is important to develop a formal exit strategy before your business requires one. There are a variety of risks associated with a lack of succession planning. From organizational disruption to economic consequences, businesses that do not pre-plan for structural change will falter.

Your Succession Plan:

• Should be a formal, pre-planned process
• Start several months in advance of a departure
• Consider trends that may affect financial stability & operations
  • How will changes in leadership affect employees & clients?
  • How will economic trends influence the future of the business?
  • Will the business continue to thrive using the current structure or do products/services need to change?
• Be forward-thinking
  • Consider how to develop employees for future roles
  • Evaluate the role of resources and assets during and after succession
  • Objectively decide whether the business should continue operations

Consequences of Poor Succession Planning:

• Reduced shareholder confidence
  • A lack of planning leaves room for uncertainty
  • Shareholders may revoke their support if they feel as though the company will flounder after the departure of a key figurehead
• Employee Challenges
  • When a structural change is poorly planned, employees may not know who to report to
  • Without a clear plan during transitions, staff members have reduced accountability and motivation
• Interruption in Operations
  • Training employees in new roles may interrupt normal work flow
  • Disruptions and changes to normal work flow may delay projects and client services
    • Accounts payable and receivables may not be maintained, resulting in late payments and deficits
    • Clients may experience reductions in service quality or service delays
• Excessive taxation
  • Poorly planned asset & share management will result in both the business owner and their successors overpaying on taxes
  • Finances may be depleted so much so that the company cannot continue to function and/or the predecessor’s financial security is lost
• Bankruptcy
  • Any combination of these consequences may force a company out of business
  • The leader departing the business may be forced into personal bankruptcy

Professional Succession Planning

Hogg, Shain & Scheck offers professional succession planning services for your business including:
Financial Audits

• Value your business
  • Determines financial health of the enterprise
• Asset management
  • How will assets be divided?
  • Will they be sold or gifted?
  • What are the financial and tax ramifications for both the business and the person leaving?

Risk Management

• Assessing risks and opportunities to create a successful and sustainable succession strategy
• Clearly articulating risks based on factual evidence before the leadership team makes irreversible decisions

Managing & Protecting Cash Flows

• Maintain sufficient liquidity to pay the taxes due when ownership is transitioned
• Protect cash flow at a time of increased operational demands to prevent bottlenecks and deficits

Objective Evaluations

• Prioritize the needs of the company over the biases of internal parties
• Objectivity mitigates potential turmoil and promotes a healthy work environment, protecting the integrity of the succession strategy
• Displaces the responsibility of making difficult decisions onto an external party

Tax Planning

• If you want to sell, dismantle or pass on your business, we will use the most tax-efficient strategies (/tax-services/) to secure your success
• We properly handle asset transfer to avoid significant income loss
• Our firm pursues tax-effective ownership transfer
  • We structure the capital gain of asset or share sales so that the person leaving and his family will not be burdened with excessive taxes
  • Our taxation strategies save shareholders extensive personal tax and generate more after-tax income that can be re-distributed into the business or used for personal gain

Personal Financial Planning

• If you are leaving the company, we make sure that your personal prosperity is a priority throughout the financial planning process
• Manage personal taxation
• Properly invest & grow assets

Until now, your enterprise has succeeded because of your hard work and dedication. Formal succession planning will increase the return on investment for your years as a committed entrepreneur.

You can never be sure when you will need a succession planning strategy: start planning now to protect your personal and business assets. Collaborate with our team of accountants to make your succession vision viable. Contact our team and together we will develop a succession plan that realizes all of your financial goals.