Succession planning for forward-thinking business owners

Employee ownership gives you greater financial security, enables you to give up those aspects of running a business that you’ve grown tired of and allows you to do more of what you love.


Preparing your business for succession planning

This toolkit accompanies the book, Do More of What You Love: The New Approach to Business Succession Planning and is designed to help you prepare for the succession planning process

What you will learn

Succession planning

The main succession planning options and the pros and cons of each

Employee ownership

How employee share ownership can benefit you and your business

ISOP method

Discover the ins and outs of the ISOP method, in plain English

What to do next

Prepare for a smooth succession planning process with free toolkit resources

See inside

You can read the preface to the book below using the scrollable tablet and then to see some more sample content just select a chapter from the list


This book is for people like me. It’s for business owners who want to change how they work in their business so they can do more of what they love – both in their personal life and in their business.

I have worked with these people for over 30 years in my capacity as a practicing accountant dealing with a wide range of SMEs. The relationship I have had with my clients over that period has given me a privileged insight into what makes business owners different to other people – and what makes successful business owners different to the rest. I have seen incredibly successful businesses making over £1m profit every year from a converted spare bedroom and I’ve seen others that struggle for years and make no profit at all. Often there is no obvious difference between these businesses and the people that run them.

Over the last five years I have used this experience and knowl- edge to develop a structured approach to succession planning for the clients of my accountancy firm, Kirkpatrick & Hopes. We call this approach Income and Share Ownership Planning (ISOP). This book explains how ISOP works but, more fundamentally, it goes deeper into the psychology of succession planning, helping business owners face up to the need to plan for the future and their ultimate exit from the business.

I won’t speculate about why we business owners are different to the rest of the population (does owning a business change you, or do only certain people become business owners?), but the fact is that we are different in many ways. Some of these differences are good, like being master of your own destiny; some are bad, like having to live with your business 24 hours a day, every day. In this book, I have tried to take account of these (often subtle) differences, something which has been ignored in most of the business books I have read over the years.

The case studies dotted throughout the book, all of which are real life cases, provide an illustration of how the principles of this book and ISOP are applied in practice. If you think I have missed anything that should be included in this book, or if you would like to share with me your opinion on any part of it, please let me know. I am keen to build on and improve both the ISOP succession planning service itself and future editions of this book, and your feedback is an essential element of that evolution and improvement.

Andrew Gray

Chapter 1

Succession Planning

What is it that makes us business owners different? What makes us take on the risk and pressure of running a business? Usually it’s a desire to be more in control of our own destiny – or the knowledge that we can offer a better product or service than what’s already out there. In this chapter, I look at what we typically love (and hate) about running a business and how this can be channelled into effective business development and succession planning.

According to the Federation of Small Businesses (2013), there are around five million businesses in the UK. The vast majority of these, about 99.9% in fact, are either ‘micro’ businesses (between zero and nine employees), ‘small’ businesses (10–49 employees) or ‘medium’ businesses (50–249 employees). To me, the most relevant label formost of these businesses is owner-managed businesses (OMBs).

These owners are people who:

–  Own some of the shares or equity in the business.
–  Make decisions about the running of the business.
–  Are exposed to risk and uncertainty.
–  In most cases, depend on other people (mostly employees) to help with the day-to-day running of the business.

This last point is crucial to what this book is about; to do more of what you love, another person probably has to do the things you don’t love. Usually, this will be your employees (who may include family members). Alternatively, to get rid of the stuff you don’t like, you could sell or radically change the nature of the business, or you could look for ways to automate or eliminate processes.

Chapter 2

The Death of Retirement

For most business owners, selling your business effectively means going into retirement. Yes, there are those serial entrepreneurs who have interests in several businesses – after selling up, they will most likely have other businesses to take care of, or will soon buy or start another business with the proceeds. But, if that’s not you, you’ll wake up on the morning after the sale with no ‘job’ to go to. It can be a difficult adjustment to make; in fact, many people who have been through the sale process describe this experience as being very similar to bereavement.

Yet retirement is often portrayed (particularly by those firms pitch- ing to help you sell your business) as the ultimate goal: freedom from the shackles of your business, allowing you to fulfil all your dreams of travel, adventure, relaxation, time with family, etc. Another group who romanticise the whole notion of retirement are, perhaps unsurprisingly, those who help you plan for it – namely, pension and financial advisers.

The two questions I would ask are:

1. Is retirement really that enjoyable for most people?
2. Why put off doing all the things you enjoy until retirement?

The fact is that most business owners, yourself included, will have become programmed over the years to need a certain amount of adversity and challenges. No doubt you’re very ambivalent about this and, as discussed in Chapter 1, sometimes complain vehemently about all the problems thrown at you by the business. But, without those challenges, life may seem a little boring.

I remember doing a strategic planning day for a client, Rob, several years ago. One of the first questions I asked was, ‘On what date are you going to retire?’ Rob threw me completely when he answered, ‘I don’t ever want to retire.’ His reason was simply that he enjoyed doing what he did – why would he want to stop?

Of course, many people aren’t as lucky as Rob. But, as a business owner, shouldn’t you feel that way about your business? If you don’t, can you change your role in the business so that you wouldn’t want to retire? In this chapter, I set out why retirement isn’t necessarily the ‘dream’ and look at an alternative approach to the accepted norm.

Chapter 3

Exit Planning

One way or another, your relationship with your business will end at some point. The question is when and how will that exit happen? As I mentioned in Chapter 1, too many business owners don’t think about exit or succession planning until it is too late and circumstances force them down a route they might not otherwise have chosen. Exit planning is not only essential for your peace of mind, it makes sense for the business too, helping to secure its long-term future. In this chapter, to help you weigh up your options, I set out the main possibilities for exit planning and look at the pros and cons of each.

The three main exit routes for business owners

Traditionally, successful businesses get sold, and less successful ones fade away to nothing until the owner finally calls it a day. But there is another option gaining momentum among forward-thinking business owners: passing ownership to employees (including family employees) and maintaining an ongoing interest in the business.

The three main options I focus on are:

1. Let your business fade away/run it into the ground

If your business can’t be sold, most often because it is too dependent on you as the owner, this may be your only choice.


–  It avoids you having to make a hard decision about exiting. You simply carry on doing what you’re doing.

–  You’ve none of the stress and anguish that can accompany selling up. (Unfortunately, though, this only really applies if you’ve built up enough personal wealth so that you don’t need to sell.)


–  As you get older, you may become less able to run the business, especially if it is physically demanding work.

–  If your business hasn’t generated enough money for you to live on in retirement, you may be forced to carry on past your prime. This doesn’t do anyone any favours and can result in a dwindling income and standard of living.

Chapter 4

Selling Up

It’s hard to tell the exact failure rate of businesses once they are sold – few people have a vested interest in publicising the ugly facts and figures. However, according to Steve Bailey, founder of Merger Acquisitions and Integration Ltd, the failure rate of businesses post sale is a shocking 80%. He says:

In our daily lives, the chance of an 80% failure rate would deter even the bravest from involvement in a commercial opportunity. In broad terms this is the accepted statistic for mergers and acquisitions that are successfully concluded and which then subsequently fail. This is actually an understatement, as deals are excluded if agreement is not reached and they are aborted during the process. By any measure, M&As are high risk activity. (Bailey, 2014)

McKinsey & Company (2010) are a little more conservative in their estimation of the failure rate, putting it at 66–75%. But even that lower estimate is still pretty alarming.

Of course, defining ‘failure’ is not as easy as it sounds. It is perhaps most easily defined as the acquirer failing to recoup their cash investment after the sale. However, they may have benefitted in other ways that are harder to quantify, for example, by gaining access to new customers. With this in mind, failure would perhaps best be defined as failing to meet the goals (financial or otherwise) of the sale or merger.

The reasons for failure are many and varied but my feeling is that many acquirers underestimate the importance of workplace culture. Most businesses that sell are, by definition, successful at the time of the sale. This means that the employees are likely to be motivated, well rewarded (usually not just financially) and loyal. Sadly, it is rare for an acquirer to maintain that level of loyalty, even if they use the best change management consultants or are led by very charismatic people. Even a slight loss of employees’ motivation and a slight change in culture can have a massive compound effect on the performance of the business, resulting in a decline in profits. The old adage ‘culture will eat strategy for breakfast’ seems very apt.

In this chapter, I look at the importance of working on your sale- ability sooner rather than later, and explore some of the pitfalls of selling through real-life stories from business owners I know.

Choose a chapter

  • Preface

    - Introduction by Andrew Gray [...]
  • Chapter 1

    - Succession Planning [...]
  • Chapter 2

    - The Death of Retirement [...]
  • Chapter 3

    - Exit Planning [...]
  • Chapter 4

    - Selling Up [...]

Free and comprehensive Succession Planning Toolkit with every purchase

This Toolkit accompanies the book, Do More of What You Love: The New Approach to Business Succession Planning.

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Chapter overviews

A summary of the chapters can be seen below, click on the load more button to see the remaining chapters.

Chapter 1

Succession Planning

Business development is an essential part of succession planning. You need both aspects in order to really accelerate change in your business.

Chapter 2

The Death of Retirement

For most business owners, selling your business effectively means going into retirement but retirement isn’t a foregone conclusion.

Chapter 3

Exit Planning

One way or another, your relationship with your business will end at some point, taking control of exit planning as early as possible ensures the best possible outcome.

Chapter 4

Hazards of Selling

There are many pitfalls to selling up. You may find you don’t get paid the full, expected value (because certain conditions aren’t met after the sale).

Chapter 5

Tackling Planning

Succession planning is about the successful evolution of your business. It involves using business and personnel development to prepare for the next generation.

Chapter 6

Employee Ownership

The benefits of employee ownership (EO) include tax savings, higher employee motivation and engagement, increased productivity, and a smoother exit route.

Chapter 7

ISOP Method

Income and Share Ownership Planning (ISOP) allows you to maintain an interest in your business while freeing up time and benefitting from tax incentives.

Chapter 8

Leadership Role

Instead of bringing in an unknown outsider, consider retaining some leadership responsibilities yourself and having your employees take on greater management responsibility.

Chapter 9

Family Employees

When bringing family members into the company, make sure you have clear job descriptions, reporting lines, employment contracts, and a shareholders’ agreement.

Chapter 10

Valuing Your Business

A valuation is an entirely subjective thing – there is no absolute right answer to how much your business is worth. It comes down to what someone is willing to pay for it.

Chapter 11

Financial Planning & Cash Flow

Cash flow modelling is arguably the most important thing a financial adviser will do, in the context of ISOP-style succession planning, creating a clear picture of your financial future.

Chapter 12

Tax Benefits & Legal Issues

There are a number of tax incentives related to employee ownership. Often these savings can entirely cover the cost of the succession planning work.

Chapter 13

Putting Planning Into Action

Succession planning helps prepare your business for the future and you’ll need to work with specialists to create a plan, implement it and track ongoing progress.

Chapter 14

Succession Planning Toolkit

The Toolkit provides handy checklists, example documents and sample reports as well as a business development programme for those intending to sell up.

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Do More Of What You Love is available in both print and ebook formats.



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About Andrew Gray

Author - Andrew Gray


Andrew is a Chartered Certified Accountant with over 30 years’ experience of working with and advising owner-managed businesses.


He is Managing Director of Kirkpatrick & Hopes, a leading UK-based accountancy firm which specialises in business succession planning.


A firm advocate of employee ownership, see Andrew’s Blog for more on this and other topics.


7 steps for great succession planning
Weighing up your succession planning options
Why retirement is old news

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