20 Business Succession Planning Terms
Welcome to our guide on 20 business succession planning terms!
Whether you’re a business owner or an aspiring entrepreneur, understanding these key terms is crucial for your success. In this document, we’ll discuss the most important terms related to business succession planning and how they can help you achieve your goals.
- Succession Planning: The process of identifying and developing internal employees to fill key positions within the company in the event of retirement, resignation or unexpected departures.
- Exit Strategy: A plan for leaving a business, either through selling it, passing it on to family members or closing it down.
- Interim Management: Temporary management provided by an external individual or team until a permanent replacement can be found.
- Key Employee: An employee whose skills and experience are crucial to the success of the business.
- Risk Management: The process of identifying, assessing and controlling potential risks that could impact the business’s operations and profitability.
- Contingency Plan: A plan outlining how the company will respond to unexpected events such as natural disasters, economic downturns or sudden departures of key employees.
- Business Valuation: The process of determining the economic value of a business, taking into account its assets, liabilities, and future earning potential.
- Buy-Sell Agreement: A legally binding agreement that outlines what will happen to a business in the event that one owner wants to sell their share or passes away.
- Key Person Insurance: A type of life insurance that covers key employees whose sudden death or disability could have a significant impact on the business.
- Family Business: A business owned and operated by members of the same family.
- Successor: The individual who will take over leadership and management responsibilities in the event of the current owner’s departure.
- Corporate Governance: The system of rules, practices and processes by which a company is directed and controlled.
- Succession Plan Coordinator: An individual or team responsible for developing and overseeing the succession plan.
- Business Continuity: A plan outlining how the business will continue operating during and after a disruptive event such as a natural disaster or pandemic.
- Mentorship: A relationship in which a more experienced individual provides guidance and support to a less experienced individual.
- Leadership Development: The process of developing individuals within the company to take on leadership roles in the future.
- Merger and Acquisition: The consolidation of two or more companies, either through a merger where both companies combine to form a new entity, or an acquisition where one company buys another.
- Employee Stock Ownership Plan (ESOP): A type of employee benefit plan that provides employees with an ownership interest in the company.
- Buyout: The purchase of a controlling share or all the assets of a business by an individual or group of individuals.
- Non-Disclosure Agreement (NDA): A legal agreement between parties that outlines confidential material, knowledge, or information that the parties wish to share for certain purposes.
In conclusion, understanding these twenty business succession planning terms is crucial for the success of any business. As a business owner, it is important to not only have a solid plan in place for your own succession but also to understand the terminology and concepts surrounding it.