Editor’s Note: Here’s an excerpt from Succession Planning: Step-by-Step. Go here to read more. 

A sound dealership succession plan addresses a long list of issues, including retirement income, transferring wealth to the dealer’s heirs, transferring ownership, dealing with the income and estate tax consequences associated with an ownership transfer, and addressing other issues key to the ongoing success of the business; not the least of which (and often forgotten) is transitioning management.

Here are steps to develop a succession plan for your dealership.

Step 1: Identify and prioritize goals for the transition.

Step 2: Identify and prepare new management. 

Step 3: Determine retirement cash needs

Step 4: Review options for funding the transfer

Step 5: Planning for Ownership Succession

Step 6: Identifying Options for Transferring Ownership

Step 7: Integrate Succession & Estate Planning

Step 8: Develop an Implementation Strategy

Just as there are many parts to a comprehensive succession plan, there are many areas of expertise required to develop and implement an effective plan. The importance of a team coordinator cannot be over emphasized, one who is experienced in the dealership industry and succession planning and is a trusted advisor to the owner. The coordinator will quarterback the team, oversee all initiatives and communicate with the owner as decisions are made and the implementation strategy is developed. The use of written reports and memos to document the process and lay out the plan, step by step, is helpful in communicating with all interested parties. These reports can be used to: List all critical data relative to the client and the business. Reiterate goals and objectives. Communicate decisions and recommendations; what the plan is going to accomplish. Provide the action plan for implementation. Detail the implementation team’s analyses and findings. Improve the dealer’s understanding of the plan and its impact. Provide a launching pad for implementation, that is, the detail of how you will proceed.


10 Steps to Successful Succession Planning

  1. Identify and prioritize your goals.
  2. Identify and prepare your management successor.
  3. Determine your retirement cash needs.
  4. Review options for funding the transfer in light of required retirement funds.
  5. Plan for ownership succession.
  6. Identify options for transferring ownership.
  7. Integrate succession and estate plans.
  8. Develop an implementation strategy.
  9. Design a contingency plan.
  10. Monitor and adjust the plan.