Estate Planning: Putting Your Ducks in a Row

Succession and Continuity Planning for your Business

Today is the first day of fall and the changing seasons often bring with them the reminder that planning for the future is something we often put off until it becomes absolutely essential.

There is a season for everything, and your business is no exception to the rule. At some point, current leaders will give way to new leaders, and whether you’re trying to keep a family business in the family or preparing a buy-sell strategy, you’ll need to look at preservation, valuation, and a model for the future. of your business.

The importance of a plan

If you don’t already have a business continuity plan, you should write one. Not only will this plan benefit the next generation of leaders, but it will also provide a clearer view of how your business is performing now and how prepared it is for growth and change.

When new presidential candidates are about to be elected, many voters fear that the current incumbent will leave a mess for the next incumbent. The same can happen when companies change hands.

You don’t want to leave your business in its current state for someone else to inherit or take over. They may not be used to letting go of the things they have learned to ignore or fix, and every time someone is adjusting to a new environment, system, and set of responsibilities, the margin for error and the likelihood of mismanagement increases dramatically. .

Andrew J. Sherman writes that only 35 percent of family businesses survive past the first generation of ownership, followed by only 20 percent that make it to the third generation. Source: Entrepreneurship.org “Understanding the Basics of Succession and Transition Planning.” Preparation can increase your chances of a near-seamless transition, so your plans need to be well-structured, well-documented, and reviewed by all key team members.

The succession planning process

To prepare, you’ll need to plan each step of the process and join the people you’ve identified as the next generation of leadership. The following steps will provide the framework for the succession planning process:

1. Identify key leaders who will be replaced by new leaders
2. Determine the job functions and skills of current leaders.
3. Select the most appropriate team members to participate in succession planning
4. Discuss the differences between your current roles and likely leadership roles
5. Develop plans for your next wave of leadership and help them carry out preparatory activities
6. Interview and select your new leadership team and set an orientation schedule

Putting Your Ducks in a Row: How Estate Planning Relates to Your Important Documentation

There are many important facets to making sure business essentials are in place so that successors aren’t rushing to establish parameters and processes related to your vital business documentation. The following business-critical steps need to be addressed now, whether transition is imminent or a distant possibility:

1) Review important documents and records. A statutory audit of your business documentation is a good way to go. The following documentation must be subject to review:

has. Administrative documents: project plans, management reports, RFPs, SLAs, supplier and maintenance contracts, emails, etc.

b. Plan Documents – Planning documents for business continuity, disaster recovery, emergency management, incident response, contingency, etc.

against Business continuity reports: business impact analysis reports, risk assessment documents, internal and external audit reports, supply chain reports, etc.

d. Team documents: emergency response team rosters, list of personnel with authorized access to certain sites or systems, and other team management and assignment documents

me. Specialized documents: awareness materials, training program materials, network and data center diagrams, alternate office location details, work area recovery site details, etc. Depending on your industry, specialized documentation may include materials that are subject to custody and retention requirements, especially in regulated industries such as healthcare, pharmaceutical, financial, legal, and educational.

F. Human Resources Documents: Personnel files (active and inactive employee files), applicant documentation, benefits and payroll information, grievance and action records, etc.

gram. AR/AP documents: invoices, purchase orders, balance sheets, cash flow analysis, loan and credit documents, financial information, expenses, accounts payable and receivable, transaction records, utility bills, etc.

H. Historical documents: business creation records, articles of incorporation, control documents, reorganization and restructuring information, plans and other early stage planning documents, etc.

2) Make sure you have secure, redundant storage and easy recovery:

has. primary storage

b. backup storage

vs desktop systems

d. Laptops and mobile devices

me. Collaboration systems, such as SharePoint

f.cloud storage

gram. remote data centers

3) Access and control of document management systems must be based on permissions for authorized users. You don’t want any files to be damaged or lost.

4) Scan important paper documents such as system contracts, SLAs, warranties, and maintenance agreements into PDF format. Make sure the originals are stored in safe, environmentally safe and fire-resistant places. Notify new leadership of this information and store master copies on-site for easy access (after ensuring backups have been made to a secure off-site location).

5) Review or create a document management policy, which should specify what files and documents should be stored, how and where they should be stored, how and when they should be updated and when they should be backed up, and when they can be backed up. delete (if ever). The policy should also identify rules for document retrieval, version control rules, document approvals, document distribution, archiving deadlines, and rules for secure destruction.

6) Document management controls must be part of the BCMS (enterprise control management system) audit activities, at least once a year, and must be updated periodically.

7) Disaster recovery procedures, simulated scenarios, and team document recovery exercises should be part of making sure your systems are airtight for the next generation.

8) Prioritize critical documents (enlist the help of multiple department heads), emergency contact lists, and other information that may need to be accessed quickly in a crisis situation. Knowing that you can effectively manage response and recovery efforts will go a long way in ensuring that your business is ready to change hands.

9) Have an emergency tool kit that contains hard copies of relevant documents as well as digital versions on USB sticks or other convenient external storage devices.

10) Record and date your efforts and the outcome of your mock exercises, adapting plans if weak areas are identified. This information will be critical to the next generation of leaders and will help them plan for the seamless continuation of what has been started, ensuring that their security efforts are not wasted.

*Source: Paul Kirvan, Secretary of the US Chapter of the Business Continuity Institute. TechTarget search disaster recovery article, Optimizing document management systems for business continuity.

Be sure to also take a look at ARMA’s Generally Accepted Recordkeeping Principles and find a trusted records management partner if you don’t already have one. His experience will span multiple industries and provide invaluable advice to inform you if your business is ready for a transition of ownership.