As a business owner, it may be hard to imagine life after business. But having a succession plan in place can help you to retire comfortably, or keep your business running if an accident or something unexpected occurs.
What’s involved?
A succession plan details what happens when you decide to leave your business. It means you can exit smoothly and helps anyone who might be taking over. The Federal Government has a succession plan template you can follow.
Succession planning may involve:
- finding someone to take over your business
- selling your business
- ending your business
Finding someone to take over your business
Hiring someone who’s already familiar with your business to take over may allow for the smoothest transition, while letting you keep some measure of control. Think about the type of person who may be most ideal to take over from you, and see if you have any existing employees or family members who might be suitable. If you don’t know anyone, other options include asking your network or advertising.
Selling your business
If you decide to sell your business, there are some things to keep in mind. You may have to pay tax on the sale if you’re under 55 and have not become permanently incapacitated. If selling your business before then is for the purpose of funding your retirement, you may not have to pay tax on it. Your accountant should be able to give you advice.
If you need to find someone to buy your business, it can be a good idea to talk to a business broker who can talk you through your legal responsibilities, make sure your business is valued fairly, and ultimately find a buyer. If you decide to take care of it yourself, be aware that you’ll need someone to draw up a contract and make sure you understand your legal and tax responsibilities.
Ending your business
If you decide to close your business, you’ll need to set an official closing date, notify your employees, suppliers and customers, and make sure all your bills are paid. You can find out more about the steps you need to take on the Business.gov.au website.
