Succession planning is the process of preparing to transfer ownership and managerial control of a business entity to a person or persons other than its current owner in a manner that is as minimally disruptive as possible to the operation and value of the business.
The basic goal of succession planning is to create a smooth transition that ensures the continued long-term success of the business and preserves the income, opportunity and other benefits of the business for future owners. This is especially true when the intended future owners are family members.
It is estimated that 70 percent of family-owned businesses do not survive the transition from founder to second generation. Among the many obstacles faced are taxes, inadequate preparation and family conflict. In many cases, these failures could have been avoided through proper planning. The keys to success would include having a thoughtfully prepared plan which is reduced to writing and carefully implemented, and getting started as early as possible.