What to Include in a Succession Plan

Why Succession Planning Matters

A well-prepared succession plan ensures your business continues to operate smoothly if you step away—whether by choice, retirement, or emergency. Without it, your company may face leadership confusion, lost clients, reduced value, or even collapse.

According to the SBA, small businesses with formal succession plans are more likely to survive generational transitions and retain key employees. Succession planning isn’t just for large corporations—it’s essential for any business with long-term goals.

Step-by-Step: What to Include in a Succession Plan

Here’s a structured guide to building a strong succession plan:

1. Identify Key Roles and Responsibilities

List out the positions critical to your business’s success. This often includes:

• CEO or owner

• Sales/relationship managers

• Operations lead

• Financial controller or bookkeeper

Understand the tasks, decision-making power, and knowledge tied to each role.

2. Choose and Evaluate Successor Candidates

Select successors for each key role. Candidates could be:

• Family members

• Internal employees

• External hires (if no one is ready internally)

Evaluate readiness, leadership skills, and long-term fit.

3. Create a Training and Transition Timeline

Don’t just name successors—prepare them. Develop:

• Mentorship plans

• Shadowing opportunities

• Hands-on leadership training

• Deadlines for readiness milestones

A phased transition builds trust and ensures smooth handoff.

4. Document Operational Knowledge

Codify your processes and critical information:

• Login credentials and systems access

• Vendor, client, and financial contacts

• SOPs for key functions

• Strategic plans and financial forecasts

This ensures continuity if someone needs to step in unexpectedly.

5. Include Legal and Financial Details

Formalize the plan with:

• Buy-sell agreements (for ownership transfers)

• Updated wills or trusts (for family businesses)

• Life or key person insurance policies

• Tax planning strategies

Consult your attorney and CPA to align this with your estate and business structure.

6. Communicate the Plan Clearly

Share the plan with:

• Successors

• Leadership team

• Family members (if applicable)

• Your advisory team

This prevents confusion and misalignment during a transition.

Real-World Example

A retail store owner nearing retirement selected their general manager as a successor. Over 18 months, the GM was gradually introduced to vendor negotiations, cash flow management, and customer service escalations. A formal buy-sell agreement with seller financing enabled a seamless transfer when the owner stepped away.

Because the succession plan was written, trained, and funded—the transition was smooth, and the business retained its value.

Common Mistakes to Avoid

• Waiting too long to plan—leaves no time for development or funding

• Assuming family members want the business—without having the conversation

• Failing to document critical knowledge—leads to business disruptions

• Overlooking legal and tax implications—can result in costly consequences

• Not updating the plan—outdated plans are as risky as having none

Summary of Best Practices

✅ Start early—at least 2–5 years before a planned exit

✅ Identify key roles and successors

✅ Provide structured training and transition timelines

✅ Document essential processes and contacts

✅ Address legal, tax, and ownership issues

✅ Review and update the plan regularly

Succession planning is about protecting the future of what you’ve built. Need help creating or refining your plan? Book a Discovery Call to learn how we help small business owners take the next step with confidence.