Planning your succession
Business succession planning: a free template and checklist
A business succession plan is a written plan for who will own and run your business after you, and how the handover will happen. Below is a plain-English template you can fill in this week, and a checklist of what to do over the next few years.
In short: decide when you want to step back, who could take over, what the business is worth, and how you'll be paid. Then write it down, share it with your attorney and accountant, and start preparing your successor years before you leave.
Why most owners don't have one
Most small business owners know they need a plan and don't have one. It's easy to see why: it means thinking about stepping away from something you built, and the day-to-day always feels more urgent. But owners without a plan tend to end up with fewer choices: a rushed sale, a buyer who doesn't care about the people, or closing the doors.
A plan doesn't commit you to a date. It gives you options, and it protects your family and employees if something happens to you unexpectedly.
The succession plan template
Work through these seven sections. A page or two of notes for each is enough to start.
1. Your goals
- When would you like to step back? Is it a firm date or a range?
- Do you want to stay involved afterward, for example as an advisor or board member?
- How much do you need from the business to retire comfortably?
- What matters most to you: the price, keeping your employees, keeping the name, the community?
2. Who could take over
- A family member: do they want it, and are they ready?
- A manager or employee: could they run it, and how would they pay for it?
- An outside successor: someone who wants to run an established business and buy it over time.
- An outside buyer, such as a competitor or investor.
Be honest here. Many owners discover their children have built other lives, and that their best manager can't afford to buy the business outright. Both problems have answers. See passing your business to the next generation and how to choose a successor.
3. What the business is worth
Get a rough idea first, then a professional valuation when you're closer to a deal. Most small businesses are valued as a multiple of the owner's earnings. Try our free estimate.
4. How you'll be paid
Few successors can pay the full price on day one. Common structures include a down payment, a bank loan, and scheduled payments to you over several years from the business's earnings. Read aboutphased buyouts and seller financing.
5. The handover timeline
Sketch the stages. For example:
| When | What happens |
|---|---|
| Now | Write the plan. Start handing off day-to-day decisions. |
| Year 1 | Your successor joins, often as general manager. Employees and customers meet them. |
| Years 2–3 | They buy a first stake. You focus on key relationships and training. |
| Years 4–6 | They take majority ownership, then complete the buyout. You step back to advisor, or out. |
6. Training and knowledge transfer
- What only you know: key customers, suppliers, pricing, the bank relationship, how things really work.
- Which decisions you'll hand over first, and which last.
- Where the important documents and passwords live.
7. If something happens to you
- Who has authority to run the business and sign checks if you're suddenly unable to?
- Is there a buy-sell agreement with your partners, and is it funded (for example with insurance)?
- Do your will or trust and your business documents agree with each other?
Succession planning checklist
Use this alongside the template. Most owners take a few years to work through it.
This month
- Write down your goals and rough timeline (section 1 above).
- Get a rough estimate of what your business is worth.
- List everyone who could realistically take over.
This year
- Meet your accountant about taxes and your attorney about structure.
- Put your financial records in order: three or more years of clean statements and tax returns.
- Start delegating: let your team make decisions without you.
- Document what only you know.
- Set up emergency authority in case you're unable to work.
One to three years out
- Choose your successor and agree the outline of a deal.
- Bring them into the business and introduce them to employees, then customers.
- Get a professional valuation and have the agreement drafted.
During the handover
- Hand over responsibilities on the agreed schedule.
- Review the business's finances regularly while payments are being made to you.
- Step back, and let your successor lead.
No successor in mind?
That's the most common gap in owners' plans, and it's the one we help with. We introduce owners to vetted successors who want to carry a business on and buy it over time. It's confidential and costs owners nothing.See how it works.
Common questions
What should a small business succession plan include?
At minimum: who will take over, when and how you'll step back, what the business is worth and how you'll be paid, how the successor will be trained, and what happens if something goes wrong. It should also cover who has authority if you're suddenly unable to work.
When should I start succession planning?
Ideally three to five years before you want to step back, and earlier if your business depends heavily on you. That gives you time to find and train a successor and to make the business less owner-dependent, which also tends to raise its value.
Do I need an attorney for a succession plan?
You can do much of the thinking yourself with a template like this one. The legal documents, such as a buy-sell agreement, a purchase agreement, or changes to your operating agreement, should be drafted by an attorney, and your accountant should review the tax side.
What if I don’t have anyone to take over?
That's common. Many owners have no family member or employee who wants the business or can afford it. An outside successor, someone who wants to run an established business and buy it gradually, is one option. We introduce owners to people like that.
What is the difference between a succession plan and an exit strategy?
An exit strategy is how you leave and get paid. A succession plan is broader: it also covers who leads the business after you and how they're prepared, so the business carries on. A handover to a successor is both.