5 Key Factors to Successful Succession Planning

Succession planning is often tricky, and requires careful finesse to ensure that the business is left in capable hands, and everyone is satisfied with the end result. In the beginning of the process, it might seem like those two factors are mutually exclusive, but it is not an impossible feat to achieve. There are some key factors to keep in mind while succession planning that will greatly increase the chances for long-term success.

1. Fair is fair, always – even when it’s in the family

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Many businesses are a family affair, but it is important to keep in mind how your business fares in different conditions and whether it is truly better to keep it in family hands.

Keep in the mind the valuation of your business, and how that may affect the matter. One important aspect to consider is whether you want to pass the business on to your family, or sell it to a third party.

We are adept at helping you weigh the advantages of each option, and working through some of the implicit biases that may factor in to these decisions – especially making it fair.

Transferring family ownership tends to add a tremendous amount of stress for individual family members, and we understand that. We work with each family member to ensure that they feel that they are an equitable share.

2. Minimize the tax burden

A transitioning business is often a significant burden for family members, and it is important to be mindful of that.

The challenge associated tends to be that family businesses are not generally liquid assets, but taxes may still be due after ownership is transferred.We understand that, and do our best to work through these issues as best as possible.

3. Consider the difference between management and ownership

Unfortunately, management and ownership are not interchangeable terms so it is incredibly important to consider who will actually run the business in your absence.


There are many ways to mitigate this, such as by transferring management to one of your children but transferring equal business ownership shares amongst all your children – even if they are not actively involved in the business.

Consider doing a trial run, such as when you are on vacation. Your potential successor can easily step in, assume some of the responsibilities and evaluate whether this is the right role for them. It is a great way for them to gain experience while you decide how prepared this person is to take over.

4. Have a retirement plan in place

Your retirement plan is an incredibly important aspect for long-term financial planning as well as day-to-day activities. This circles back to the management versus ownership idea mentioned earlier.

Your retirement plans, and funds, will largely dictate how you decide to interact with the business as well as what you wish to gain from it after retiring as well.

5. Consider hiring a professional

There are many, many nitty-gritty details that go into successful succession planning, coupled with the stress with dealing with family members. Especially in trickier situations, where it might not easy to balance that while still keeping track of what needs to be done, it fast becomes overwhelming.

it is best to have a professional in place who is able to handle these mitigating factors and still create a strategy that works

In these scenarios, it is best to have a professional in place who is able to handle these mitigating factors and still create a strategy that works, and find the right solution for your unique needs. At Sean Hugo, we use a 5 step succession strategy that includes:

1. Business Valuation
2. Business Restructuring
3. Tax Consequences
4. Retirement Projections
5. Tax Projections

To learn more about succession strategies, and the best practices to ensure you are leaving your legacy in capable hands, please contact us by calling our office at 405-759-2796 or by scheduling a free consultation online.

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At Ascension, our scope far exceeds basic accounting services. The practice includes consulting with business owners on how to run their businesses more profitable. Our focus is on reducing the overall tax burden businesses face and providing management consulting services to business owners.