Whether you want to change careers or are ready to start a new journey, passing on your business can be more appealing than shutting it down altogether.
Having a succession plan you can follow with the new owner could help the process run more smoothly and avoid confusion. When developing your plan, it is vital to go in-depth with details to ensure the handover is carried out as you wish.
Who will you be transferring your business to?
Enter the details of the intended successor and an alternative successor and whether they’re a family member, business partner, or someone interested in buying your business.
Establishing your successor has undergone the proper training and education for the position will also assist in the transition and business longevity.
State whether the structure of your business falls under a partnership, sole trader, trust, or company. This will allow you to teach your successor the ways of the business and the correct process of doing various tasks.
State what type of succession has been planned, with details of whether it will be a complete or partial succession. Overstepping the boundaries and trying to be over-involved after you no longer own the business can cause conflict between yourself and your successor, negatively impacting the business. To avoid becoming overbearing, make sure you prepare yourself for what no longer owning the business will mean, such as how you are going to fill the time that was previously spent working.
Include any contracts that need to be created or modified for the succession. Provide whether there is a legal document that outlines the terms and agreements of the succession. Before handing over the business, you will need to do a number of things, including cancelling tax registrations such as GST, lodging any final tax returns, paying any outstanding activity statements or bills, and transferring any other assets such as domain names or web registrations.
This includes information such as the current value of the business, the taxes payable in the event of a transfer, retirement income or payment, and sale details (minimum sale price of the business, how long you plan to have the business on the market, who will receive the proceeds).