Every business journey has a destination but far too many owners never map out the final steps. Whether you plan to retire, sell, or pass the reins to the next generation, succession planning is critical for long-term business success.
Yet in New Zealand, many small to medium-sized businesses delay or overlook succession planning. The result? Missed opportunities, diminished business value, and avoidable stress during transition.
In this article, we’ll explain what succession planning is, why it matters, and how to build a plan that secures both your legacy and your business’s future.
What Is Business Succession Planning?
Succession planning is the process of preparing for the smooth transition of leadership or ownership of a business. It involves identifying future leaders or buyers, developing talent internally, and ensuring the systems and structures are in place to support a handover.
It applies to:
- Family businesses passing to the next generation
- Owners preparing for retirement or exit
- Businesses planning for unexpected leadership changes (e.g. illness or resignation)
- Growth-stage companies developing leadership pipelines
Succession planning isn’t just about naming a successor; it’s about making your business transition-ready in a way that preserves value and continuity.
Why Is Succession Planning Important?
Without a clear succession strategy, businesses are vulnerable to disruption, uncertainty, and value erosion. Some of the risks of not having a plan include:
- Unclear leadership in a crisis or emergency
- Family or shareholder disputes
- Loss of key clients or staff during transition
- Reduced business valuation due to perceived instability
- Missed opportunities to maximise sale value or preserve legacy
On the other hand, a strong succession plan offers:
- Stability for staff and stakeholders
- Time to train and develop future leaders
- Enhanced business value and attractiveness to buyers
- Greater peace of mind for owners
In short: succession planning is future-proofing.
Best Practices For Effective Succession Planning
Done well, succession planning is a structured, proactive process that can take months or even years. Here’s how to approach it:
- Start early
Succession planning is most effective when started well before an exit is on the horizon. This gives you time to assess options, upskill successors, and make well-informed decisions. - Clarify your goals
Do you want to exit entirely, stay involved in an advisory capacity, or hand the business to family? Your ideal end game will shape the structure of your plan. - Assess your business readiness
Would someone else be able to take over your business easily? Identify any key-person risk, gaps in documentation, or reliance on the owner’s relationships. - Identify and develop successors
Whether internal staff or external candidates, your successors need time and support to step into leadership. This includes mentoring, skills development, and clear role definitions. - Document your plan
A succession plan should include:
• Transition timeline and milestones
• Governance and decision-making structures
• Roles and responsibilities
• Legal, financial, and tax considerations - Communicate transparently
Staff, clients, and suppliers need confidence in your plan. Timely, clear communication helps manage expectations and reduces anxiety during the transition period. - Review regularly
As your business evolves, so should your succession strategy. Treat it as a living document to be reviewed annually.
Family Business Considerations
Succession can be particularly complex in family-owned businesses. Emotions, legacy, and family dynamics all come into play.
Common challenges include:
- Differing expectations between generations
- Lack of interest or capability in potential successors
- Conflicts between family and non-family staff
Having open, facilitated conversations and sometimes bringing in a neutral advisor can help clarify roles, resolve tensions, and ensure decisions are made in the best interest of the business.
How Advantage Business Supports Succession Planning
At Advantage Business, we work alongside business owners to design and implement practical, tailored succession plans. Our approach focuses on:
- Clarifying personal and business goals
- Identifying future leadership or exit pathways
- Preparing the business for handover or sale
- Supporting communication and governance processes
- Managing risk throughout the transition
Succession planning is about taking control of your future. A strategic plan protects your business, your people, and your legacy. It gives you options, time, and confidence as you plan your next move.
Thinking about succession, but not sure where to begin?
Whether you’re planning years ahead or need to make decisions now, a conversation with the right advisor can bring clarity and momentum. Talk to Advantage Business about building a succession plan that reflects your goals, protects your business, and sets the next chapter up for success. Begin the conversation here.