How to Build the Right Business Succession Plan for Your Clients

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One of the most important aspects of financial planning is building a business succession plan. But not everyone knows what this is or how to create one for their clients. In this blog post, we’ll dive into the details of what a business succession plan is, why it’s essential, and how to go about creating one for your clients.

1. Understanding Business Succession Planning

A business succession plan is a plan that outlines how a business owner will transfer ownership and control of their company to someone else. This plan should be in place in case the owner becomes incapacitated, retires, or passes away. Given that most small businesses in the United States are family-owned, succession planning for business ownership is critical.

To build a successful succession plan, the owner needs to consider several factors that impact their business, including their goals for retirement, the value of their business, potential successors, and the tax implications of transferring the business. Business owners need to work with a financial planner to determine the right strategy.

2. Working with the Right Parties

When it comes to business succession planning, it’s crucial to work collaboratively with several parties to ensure that the process goes smoothly. This includes attorneys, accountants, and financial planners. Each of these professionals will bring their expertise to the table, and together, they can help the business owner build the ideal succession plan.

The reason independent financial planners play an essential role in business succession planning is that they are tasked with identifying the best ways to preserve and grow the owner’s assets. They can serve as advisors to the owner on how to manage their business so that it is financially healthy and ready for succession.

3. The Right Timing

Timing is also a critical factor in business succession planning. Even though business owners can create a succession plan at any point, planning should begin as early as possible to give the owner enough time to develop and implement their plan. It is important to remember that no matter how proactive a business owner is, unexpected situations can arise. Therefore, keeping the plan current and adaptable is key.

4. The Importance of Open Communication

Another important aspect of a successful business succession plan is open communication. The owner needs to communicate with potential successors early and often. It’s also essential to inform employees about the plan so that they understand what will happen to the business should there be a transition in ownership.

5. Reviewing and Updating the Plan

As the business evolves, the succession plan should evolve, too. A good time to review and update the plan is during annual checkups with the client. Being proactive and reviewing the plan annually can help catch any issues before it’s too late. A thorough and relevant plan is your best friend in matters related to succession.


A business succession plan is essential for many businesses as it ensures a smooth transition of the company’s ownership from the current owner to a successor. Financial planners play a critical role by advising business owners on strategies that help manage the business’s financial health and prepare it for succession. Working collaboratively with other experts and establishing communication early and consistently are key steps to developing an effective succession plan. As a financial planner, it’s your responsibility to make sure your client’s succession plan is thorough, adaptable, and current. The earlier you start the process, the better.

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