A Succession Planning Process Checklist For Owners

The following succession planning checklists can be used by family business members as part of the succession planning process.

The checklists cover both the personal or soft, and the hard economic side of the process. The broad areas covered in this checklist include financial security, the role of owners and family, and the owner's goals for the family and business.

Financial security for the owner and family members

What are the owners and family’s current and future income and cash flow requirements?
What are the owners and family’s total assets and liabilities, now and in the future?
What are the owners and family’s current and future insurance needs?
What are the owners and family’s financial reserves, assets and investments outside the family business?
Are these reserves adequate for the owner's retirement?
What is the balance between family business assets and other assets? Is this balance appropriate to the owner's circumstances and to achieve the owner's goals?
Has sale of the business been considered?
Has the sale of part or all of the business to family members, minority owners or employees been contemplated?
Have employment agreements, deferred compensation arrangements and disability payments been examined/evaluated?
Would it be appropriate to convert some of the owner’s investment in the family business to the owner's personal portfolio through dividends or reorganisation of assets?

The role of the owner and family

Is management and ownership succession an option?
What role does the owner want now and in the future?
Does the intended role for the owners on retirement provide for dignity, challenge and training of the next generation?
Does the role offer the opportunity to enjoy the accomplishments of others and the business?
What roles will family members have in the family business?
Will any family member be assigned a role beyond his or her ability or interest?

Owner's goals for the family and the business

Is there a written succession plan?
Has the succession plan been communicated to the relevant people?
Has the spouse and other key people provided input?
Has there been family discussion of succession issues?
Will family members and spouses be offered an opportunity to be involved in the family business according to their commitment and abilities?

Checklist of Tasks for Owners

The following is a useful checklist of tasks for owners. The tasks include:

A strategic plan that identifies the qualities needed in the future leadership of the business.
A personal financial plan with which to identify elements of personal financial security.
An estate plan that properly documents ownership succession and minimises taxes and provides security after retirement.
A Family Mission Statement articulating the family’s commitment to continue the business as a family enterprise and the reasons behind that commitment. It also describes the family members’ vision for the business and the family’s role in the firm.
Holding a Family Retreat: a meeting with family members to prepare the Mission Statement can help all those involved understand the reasons for completing the succession process long before the transfer of authority and control actually takes place.
Preparing contingency plans for succession as a crucial safeguard against untimely forced sale or liquidation of the business.
Installing an outside board of directors or advisers to help with a transition to new leadership if necessary.
Putting together a Family Executive Committee or Succession Task Force to help.
Mentoring and supporting the designated successor.
Planning to let go.
A statement of family values as they relate to the business.
Principles guiding family-member compensation.
Guidelines for family-member advancement in the business.
A family code of conduct as it relates to the business.

Professor Kosmas Smyrnios. This paper has been adapted from his recent book, Family Business Succession Planning: A 10-Step Guide (2000). Centre for Professional Development. Tel. +61 3 9205 0600. Professor Smyrnios can be contacted on +61 3 9925 1633
First published: 28 May 2001.
Last updated: 8 December 2004.