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

Step 9: Design a Contingency Plan

Step 10: Monitor & Adjust the Plan

Succession planning should be part of the dealership’s strategic plan, but it is also a dynamic process that needs adjusting based on the dealer’s changing goals and life circumstances. The frequency of review varies, but we recommend at least an annual review. Changes in the owner’s personal life along with changes in tax laws, economic conditions and even in manufacturers’ sales and service agreements can create the need to redefine goals and adjust the succession plan.

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.