What is the difference between a business continuity plan and a succession plan?
A business continuity plan keeps the business running when something interrupts it, such as an illness, an accident or an outage. A succession plan moves ownership and leadership to someone else on purpose, over time. An owner preparing to sell usually needs both, because buyers look for a business that does not stop when one person is missing.
People often use the two terms as if they meant the same thing. They answer different questions. One asks what happens on Monday if the owner cannot come in. The other asks who will own and lead the business in a few years, and how that change will happen. Both matter if you expect to sell, and they work best when written side by side.
What a continuity plan covers
A continuity plan is about keeping the doors open through a surprise. It lists who can sign cheques, who talks to customers, who holds the passwords and keys, where the key records are kept and what to do if a system, a supplier or a building fails. It is practical and short, and it is meant to be used on the worst day. The BDC publishes a step-by-step guide to building one.
What a succession plan covers
A succession plan is deliberate. It names the person or group who will take over ownership, leadership or both, sets a timeline and describes how knowledge, relationships and authority will pass across. It can lead to a sale, a family transfer or a sale to staff. For the wider picture, see what business succession planning is and why it matters.
Who holds each plan
The owner usually writes both, but others need to know where they are. A continuity plan should be known to a trusted manager, a bookkeeper and your lawyer, since they may have to act without you. A succession plan is often shared more narrowly, with the people who will carry it out and the advisers who help structure it.
Why a seller needs both
A buyer wants evidence that the business runs without heroics. A tested continuity plan shows that, and a clear succession plan shows that you have thought about the handover. If you are early in your thinking, what to do first when you are thinking about selling is a good place to begin.
Related reading
13 pages on the same subject, grouped by topic.
Succession
- Expert answerWhat is business succession planning, and why does it matter?
- Expert answerWhat does a succession plan actually contain?
- Expert answerWhen should I start planning my exit?
- GuideHow do I plan an exit strategy for my small business in Canada?
- GuideWho can help me with succession planning for my business?
- GuideHow do I plan to retire from my business and hand it over?
Selling
- Expert answerWhat should I do first when I’m thinking about selling my business?
- Expert answerHow do I get my business ready to sell over twelve months?
- Expert answerDo I need key employees on side before planning my exit?
- Expert answerCan declining health force me to sell my business faster?
- Expert answerHow far in advance should I prepare to sell?
- ChecklistSale-ready financials checklist
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentBusiness continuity plan (BCP) in 8 steps, with templates
- 02Business Development Bank of CanadaGovernmentWhat is succession planning?
- 03Business Development Bank of CanadaGovernmentAdvice for succession planning - Articles and tools
- 04Canadian Federation of Independent BusinessResearch dataSuccession Tsunami: Preparing for a decade of small business transitions
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