Tim Smith

Dec 09 2015

6 Ways to Start a Business Continuity and Succession Plan


business-continuity-and-succession-plan

As a business owner, deciding to transition to the “next owner” can be a difficult and complex process. You have put your blood, sweat, and tears into making your business a success and want to see it continue to thrive. Here are six components to help you get a comprehensive Business Continuity and Succession Plan (BCSP) started:

Business Plan and Business Management Systems

Where is the business going and what is the health of the business? Include your vision for the business, culture, growth plans, the right people in the right seats, key differentiators and value drivers, financial resources and contingency plans.

Business Continuity Plan

What will happen when something bad happens to one of the business owners—buy-sell agreement, life insurance, and disability insurance. Be sure to have all these items included in your business continuity plan.

Business Succession Plan

Who do you want to manage, own and govern the business after you?

  1. Management Succession – Backfilling leadership positions, hiring and backfilling with more qualified people as company grows.
  2. Ownership Succession – Think about who do you want to own the business next. Is it family, key leaders, staff (ESOP) or none of the above?
  3. Governance – Establish a Board of Advisors or Board of Directors.

Personal Financial Plan

Prepare adequate resources for life after exiting the business and what to do with excess resources. Consider your cash flow (income-expenses), tax (income, capital gains, estate), risk (insurance, investments), estate, and philanthropy.

Estate Plan

What will happen to your “stuff” upon their death?

Annual Business Review

Annual review of 1-5 above to ensure the BCSP stays current as time marches on and events happen.

No matter who your successor will be family member, co-worker, or someone from outside your business having the right collaboration advisor team is critical. Advisor teams can consist of:  business/family advisor, attorney, CPA/Tax advisor, insurance advisor, Certified Financial Planner and of course, your trusted Hills Banker.

As you start your business succession plan remember that you should not underestimate the importance of the communication. Taking down barriers and allowing open communication will help you have the necessary complex conversations with your key decision makers.

* Source: Alan Richardson, Transition Point Business Advisors
 
 
Tim Smith

About Tim Smith

Tim Smith is a Senior Vice President, Commercial Banking Team Leader at Hills Bank’s Iowa City South Gilbert Street location. He has been at Hills Bank since 1980 helping businesses and individuals with their banking needs. Tim was raised on a dairy farm in Newton, Iowa. Tim attended college at Iowa State University and Graduate School of Banking at the University of Wisconsin-Madison. He is an active volunteer in his community, especially with the Iowa State Extension, 4-H Foundation, and Zion Lutheran Church. He also enjoys fishing, farming and woodworking. Tim can be reached at tim_smith@hillsbank.com.


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