Making sure you go the distance: show you've planned for the long haul by having a succession plan in place.

Show you've planned for the long haul by having a succession plan in place

No business plan is complete without a succession plan. This is the mechanism that helps ensure a smooth transition of the ownership and/or management of your business if, for any reason, you or a key executive is no longer at the helm. While lenders and potential investors don't generally require this level of detail to understand your business, including a section on succession planning makes a positive impression. "Most investors are looking for long-term growth and not a shooting star," says Tom Plaut, a tax services partner with , Deloitte & Touche in Cincinnati. "Showing a plan that encompasses hiring and grooming of successors for you and your management team says that you've thought things out pretty thoroughly and intend to be in business for the long haul."

According to Deloitte & Touche, only a third of family-owned businesses survive into the next generation, largely because of inattention to this matter. If you're unable to take even a week off because there's no one to take over, your business could be headed for a similar fate.

Here are key aspects to consider when addressing this critical stage of your business planning:

* Devise short- and long-term business goals. Then match them to the goals of the owners or family members involved. One family member may be interested only in short-term profits and quick payouts, while another may want to reinvest profits in the business for long-term growth. Resolve any areas of conflict or overlap and describe how you'll support the overall goals.

* Address succession of both ownership and management. Describe what you'll do to identify potential leaders both inside and outside the company to keep your pipeline filled. Outline the career development opportunities, including training, that you'll make available. For instance, will you send key people to other, larger companies for a stint, funnel them through your organization from the ground up or establish a rotating position where people can understudy your role?

* Make the transition a smooth one. Should you die, become incapacitated or retire, do you want the business sold, liquidated or transferred to partners or specific family members? Each option comes with its own set of legal and financial requirements. Your attorney will help you with the required paperwork--for instance, a partnership agreement that protects your shares. Your accountant will help with financial projections and tax planning, and your insurance agent can provide protective policies to lessen the impact of state, gift and estate taxes that could force the sale of your business upon your death.

This concludes our eight-part series on putting together an effective business plan. Here are a few tips on what to do with it now that you have it all together.

* Be as comprehensive as possible. Make sure you've covered all the bases and cut away any fat that only delays the reader.

* Let the plan be a benchmark for progress. Treat it as a living document that should be revisited at least once a year. It should also help you maintain consistency in how you describe your company's mission and goals to employees, customers, vendors, etc., as well as to remind yourself just how could you really are.

* Keep the bank in the loop. Don't hit your lender or investor cold with a request for money. Start building early interest by regularly updating them on your progress. This gives the impression that you don't really need money (always the best time to raise it). By the time you do ask, the bank may be hooked. At that point, go with business plan in hand and close the deal.