A solid company succession plan not only helps you sleep nights;
it's also a retention and motivation tool. It is important to
consider the emotional consequences of these decisions as they can
affect how smoothly the transition occurs.
You know that building a trucking business requires hard work,
dedication and sacrifice. And that's exactly why succession
planning is so important: to maintain and extend the success of
your business into the future. It's a way to protect all your
hard work and allow you to maximize your proceeds in the event of
retirement, illness, disability or death. It's also a way to
motivate, retain and develop good employees.
In a nutshell, succession planning is about identifying and
developing your top talent to take on senior positions. If you are
not doing this, you are risking not having a strong team in place
ready to step in when you need them to. While on the face of it,
most business leaders understand how critical succession planning
is, the reality is they are not devoting the time and resources to
make it happen and as a result they are being reactive and having
to scramble when there are unexpected departures.
Part of the problem is that many owners feel overwhelmed with
the scope of the task. Here, we share our best lessons learned and
present what you need to know and do to create a comprehensive
1. Outline Your Objectives for the Succession
Do you want a clean exit from the business without any continuing
day-to-day responsibilities or do you want to transition your
involvement over a period of time? This will impact the timeframe
for the plan and how you execute it.
2. Determine What Your Business is Worth
A Chartered Business Valuator (CBV) will help you arrive at the
fair market value of your business and give you a benchmark of what
your business is worth. They can also help you maximize the value
of your business by increasing sales, cutting costs and ensuring
the balance sheet is optimized.
3. Identify Likely Successors
Family members, employees and third parties are all possible
successors of a business. Special attention should be given to
situations where some, but not all, children are identified as the
likely successors of a business. Succession plans have an increased
risk of failure when injustices, whether actual or perceived, arise
from the transition of a business to one child and not another. It
is important to consider the emotional consequences of these
decisions as they can affect how smoothly the transition occurs. In
the event that you decide your business is better suited to be sold
to a third party, create a list of possible purchasers who you
believe may wish to acquire your company. It is important to
include any competitors on this list who may be willing to pay a
premium to acquire your company's assets and in particular your
4. Understand the Legal and Tax Implications of Your
It is important to seek the assistance of tax and legal
professionals in order to ensure your tax bill is minimized and no
unforeseen legal complications arise when you want to exit the
5. Do Not Delay
It's important to start planning early as it may take several
years to implement a comprehensive succession plan.
The key objective in a successful succession plan is to ensure
the smooth transition of your business. In order to maximize the
value of your business, focus on how your departure will impact
your business's relationships with its customers, suppliers and
employees and leave the valuation and tax planning issues that are
integral to a succession plan to your trusted professionals.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
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