Recent research from MYOB shows that nearly half of Baby Boomer small business owners are planning to exit their business within the next one to five years. Yet, many don’t have a succession plan in place to guide that transition.

Without a clear exit strategy, handing over the reins from an experienced owner to a new, less experienced successor can quickly turn from exciting to chaotic.

A solid succession plan helps you protect the legacy you’ve built and ensures your business continues to thrive long after you step away.

What Is a Succession Plan and Why Do You Need One?

A succession plan is your roadmap for transferring the ownership and leadership of your business to someone else — whether that’s a family member, key employee or external buyer.

It sets out when and how the handover will take place, the terms of the transfer, and all the finer details around your own exit. With a clear plan in place, you can make sure everyone involved understands the process and their responsibilities.

Four Key Elements of a Strong Succession Plan

A good succession plan outlines not just your departure, but how the next phase of your business will unfold. Here are the essential elements to include:

1. Define the owner’s exit

Be clear about your role once you step back. Will you stay on for a period in a consulting or advisory capacity, or will you exit completely? Setting out these details early avoids confusion and ensures a clean transition — legally, financially and operationally.

2. Establish a transition timeline

Map out the key milestones and deadlines for the transfer of ownership, responsibilities and knowledge. A clear timeline keeps everyone accountable and helps maintain business continuity during the transition period.

3. Identify your successor

Decide who will take over the business and what support they’ll need to succeed. Whether it’s family, a trusted team member or a buyer, outline the training, mentoring and authority handover required to give them confidence in their new role.

4. Set out the financial arrangements

Document how the business will be valued and the terms of payment. Will the sale be a lump sum, paid in instalments, or include an equity share? Having these details sorted in advance helps avoid disputes and ensures everyone’s expectations are aligned.

Getting the Right Advice

Succession planning isn’t just about deciding when to leave — it’s about ensuring the business you’ve built continues to grow in capable hands.

Before finalising your plan, it’s important to seek advice from your accountant and lawyer. The right guidance can help you structure your exit in a way that’s tax-effective, legally sound and aligned with your long-term goals.