March 19, 2024

Succession planning is the process of identifying the critical positions within your organization and developing action plans for individuals to assume those positions. Taking a holistic view of current and future goals, this type of preparation ensures that you have the right people in the right jobs today and in the years to come. In the long term, succession planning strengthens the overall capability of the organization by: Identifying critical positions and highlighting potential vacancies; Selecting key competencies and skills necessary for business continuity; Focusing development of individuals to meet future business needs. A succession plan identifies future staffing needs and the people with the skills and potential to perform in these future roles. Professional & Organizational Development’s Succession Planning Toolkit will help guide you, though we strongly suggest you involve your assigned HR consultant and/or HR administrator in this process as well. What Is Succession Planning? The term succession planning refers to a business strategy companies use to pass leadership roles down to another employee or group of employees. Succession planning ensures that businesses continue to run smoothly and without interruption, after important people move on to new opportunities, retire, or pass away. It can also provide a liquidity event, which enables the transfer of ownership in a going concern to rising employees. Succession planning is a good way for companies to ensure that businesses are fully prepared to promote and advance all employees—not just those who are at the management or executive levels. Succession planning is a contingency plan. It is not a one-time event. Rather, it should be reevaluated and updated each year or as changes dictate within the company. As such, it evaluates each leader’s skills, identifying potential replacements within and outside the company and, in the case of internal replacements, training those employees so they’re prepared to assume control.In large companies, the board of directors typically oversees succession planning in addition to the chief executive officer (CEO), and it affects owners, employees, as well as shareholders. A larger business may train mid-level employees to one day take over higher-level positions. For small businesses and family-owned companies, succession planning often means training the next generation to take over the business. The process takes a lot of time and effort. Recruitment or Proper Hiring: The goal is to choose candidates who are capable of rising through the ranks in the future. For example, an experienced person from another company might be courted and groomed for a higher position. Training: This includes the development of skills, company knowledge, and certifications. The training might include having employees cross-train and shadow various positions or jobs in all the major departments. This process can help the person become well-rounded and understand the business on a granular level. Also, the cross-training process can help identify the employees that are not up to the task of developing multiple skill sets needed to run the company.   Businesses may want to create more than one type of succession plan. An emergency succession plan is put in place when a key leader needs to be replaced unexpectedly. A long-term succession plan, on the other hand, helps the company account for anticipated changes in leadership. According to human resources (HR) experts, succession planning involves preparation rather than pre-selection. This means that those responsible must identify the skills, practices, and knowledge. Although it may seem like a complex process, it doesn’t have to be, especially if businesses and leaders are able to organize and plan ahead of time. The whole process can take anywhere between 12 to 36 months Benefits of Succession Planning Employees know that there is a chance for advancement and possibly ownership, which can lead to more empowerment and higher job satisfaction. Knowing there is a plan for future opportunities reinforces employees’ career development. Management’s commitment to succession planning means that supervisors will mentor employees to transfer knowledge and expertise. Management keeps better track of the value of employees so positions can be filled internally when opportunities arise. Leadership and employees are better able to share company values and vision. A new generation of leaders is needed when there’s a mass exodus of people from the workforce into retirement. Proper succession planning benefits shareholders of public companies, especially when the next candidate for CEO is involved in business operations and is well respected years before the current CEO retires. Also, if investors observe a well-communicated succession plan, they won’t sell the company’s stock when the CEO retires. FAQs How Does Succession Planning Work? Succession planning is used by businesses to streamline the process involving a change of leadership or ownership. It involves recognizing internal employees who merit career advancement and training them to assume new roles within the company. These plans only work if companies take the steps necessary to prepare. Plans are often long-term to prepare for inevitable changes in the future. Emergency plans can be set in place to account for unexpected changes. What Is Succession Planning in Business? Succession planning is an important part of any business to help it run smoothly and without interruption whenever there needs to be a change in leadership. Changes can be the result of people leaving the workforce (changing companies, switching careers, or retiring) or if there are unexpected circumstances, such as the death or displacement of a team member. What Are Some of the Common Mistakes Companies Make During Succession Planning? Succession planning requires careful organization and (as the name suggests) planning. Companies may miss opportunities or make missteps if they can’t communicate their vision with employees, don’t adopt a formal agreement or plan (including a shortlist of candidates and conducting regular reviews of positions and employees), assume their talent has the skills and knowledge to advance and succeed, fail to use succession plans for all employees, and ignore the need to diversify their talent pool. Practice area’s of B K Goyal & Co LLP Income Tax Return Filing | Income Tax Appeal | Income Tax Notice | GST Registration | GST Return Filing | FSSAI Registration | Company Registration | Company Audit | Company Annual Compliance |

The RCMC (Registration Cum Membership Certificate) is an authorization document for importing or exporting restricted products according to the Foreign Trade Policy (FTP). Typically, the Export Promotion Councils (EPCs), Commodity Boards, and Export Development Authorities established by the Director General of Foreign Trade (DGFT) for each restricted product issue this certificate. Moreover, it functions as proof of membership or registration of an exporter with a specific EPC, commodity board, or export development authority. The RCMC is essential to benefit from concessions provided under the FTP for importing or exporting restricted goods. Registration-Cum-Membership Certificate (RCMC) The Registration-Cum-Membership Certificate (RCMC) validates an exporter dealing with products registered with an agency or organization authorized by the Indian Government. This certificate indicates that the exporter is registered with the authorized agency or organization. Why RCMC Registration? Firstly, it authorizes importing or exporting products that fall under the restricted category per the Foreign Trade Policy (FTP). Secondly, it is evidence of membership or registration of an exporter with a specific EPC, commodity board, or export development authority. Thirdly, it is required to take advantage of concessions provided under the FTP for the import/export of restricted goods. Eligibility for RCMC Registration Online Exporter or Merchandiser (Merchant)- Before applying for RCMC registration, the exporter or merchandiser must confirm that their business deals with imports and exports. This is one of the key requirements for starting a manufacturing company in India. Additionally, the exporter must prove they have applied for an Import Export Code (IEC) from the authorized authority. The DGFT (Director General of Foreign Trade) regulates the IEC. Business Main Line Declaration- In the Business Main Line Declaration, the exporter or merchant must specify their primary business line. For instance, if their main business is dealing with coffee and tea products, they need to consult the Tea and Coffee Promotion Board. In case there is no export promotion board or regulatory agency for the commodities dealt with by the exporter, this needs to be mentioned as well. Consent from the Board of the FIEO- The applicant must obtain the necessary board permission or clearance from FIEO. If no specialized board is available for a specific product, the applicant needs to apply for approval to FIEO. In addition, obtaining FIEO authorization is also required for RCMC registration. Who issues the RCMC? The certificates are issued to the exporters and importers by Registering Authorities. They include Export Promotion Councils (EPCs), Commodity Boards and Export Development Authorities. These bodies are authorised to act as Registering Authorities by the DGFT (Director General of Foreign Trade). There are currently 35 organisations that act as Registering Authorities. They comprise of:- 27 Export Promotion Councils 6 Commodity Boards 2 Development Authorities The main aim of these bodies is to promote and enhance the development of Indian exports. They are divided into different sectors, each one responsible for a particular group of products. Benefits of RCMC Access to export promotion schemes and benefits – RCMC is a mandatory requirement for availing export promotion schemes and benefits such as Duty Drawback, Merchandise Export from India Scheme (MEIS), and Market Access Initiative (MAI). Facilitation in import and export – RCMC makes it easier for exporters to import or export restricted goods as the certificate validates the exporter’s authenticity and products’ authenticity. Easier customs clearance – RCMC reduces the time and effort required for customs clearance as it proves the exporter’s membership with a recognized authority and their compliance with government regulations. Enhances credibility – RCMC enhances the credibility of the exporter as it is a testament to their compliance with government regulations and standards. Access to market information – RCMC enables exporters to stay updated with the latest market information and developments through export promotion activities and programs organized by Export Promotion Councils and Commodity Boards. Export promotion councils Export Promotion Councils: Agricultural and Processed Food Products Export Development Authority (APEDA) Apparel Export Promotion Council (AEPC) Basic Chemicals, Pharmaceuticals and Cosmetics Export Promotion Council (CHEMEXCIL) Carpet Export Promotion Council (CEPC) Chemicals and Allied Products Export Promotion Council (CAPEXIL) Council for Leather Exports (CLE) Electronics and Computer Software Export Promotion Council (ESC) Engineering Export Promotion Council (EEPC) Federation of Indian Export Organisations (FIEO) Gems and Jewellery Export Promotion Council (GJEPC) Handloom Export Promotion Council (HEPC) Handicrafts and Handlooms Export Corporation of India (HHEC) Indian Oilseeds and Produce Export Promotion Council (IOPEPC) Indian Silk Export Promotion Council (ISEPC) Marine Products Export Development Authority (MPEDA) Pharmaceuticals Export Promotion Council of India (PHARMEXCIL) Plastics Export Promotion Council (PLEXCONCIL) Project Exports Promotion Council of India (PEPC) Services Export Promotion Council (SEPC) Shellac Export Promotion Council (SPEC) Sports Goods Export Promotion Council (SGEPC) Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) Tea Board of India Tobacco Board Wool and Woollens Export Promotion Council (WWEPC) The Coffee Board of India The Cotton Textiles Export Promotion Council (TEXPROCIL) Commodity Boards Coir Board Coffee Board Rubber Board Spices Board Tea Board of India Tobacco Board Development Authorities Electronics Industries Development of India (ELCID) National Centre for Trade Information (NCTI) If an export product is not covered by any Export Promotion Council or Commodity Board, the exporter can obtain the RCMC from the Federation of Indian Exporters Organization (FIEO). If the exporter deals with multi-products and the situation are unresolved, they can also obtain RCMC from FIEO. For multi-product exporters in the North Eastern States, the RCMC can be obtained from Shellac & Forest Products Export Promotion Council (except for products managed by APEDA, Spices Board, and Tea Board). For exporters of handicrafts and handloom products from Jammu & Kashmir, the Director of Handicrafts, Government of Jammu & Kashmir, is authorized to issue the RCMC. Validity of RCMC The RCMC remains valid starting from the issuance date on the 1st of April of the licensing year and is valid for five years, concluding on the 31st of March. Documents Required for RCMC The application form for RCMC must be accompanied by several mandatory documents, including: An IEC number issued by the regional licensing authority A Permanent Account Number (PAN) granted by the competent authority

The term seed capital refers to the type of financing used in the formation of a startup. Funding is provided by private investors—usually in exchange for an equity stake in the company or for a share in the profits of a product. Much of the seed capital a company raises may come from sources close to its founders including family, friends, and other acquaintances. Obtaining seed capital is the first of four funding stages required for a startup to become an established business. What Is Seed Capital? A company that is first starting out may have limited access to funding and other sources. Banks and other investors may be reluctant to invest because it has no history or established track record, or any measure of success. Many startup executives often turn to people they know for initial investments—family and friends. This financing is referred to as seed capital. Seed capital—also called seed money or seed financing—is referred to as such because it is money raised by a business in its infancy or early stages. It doesn’t have to be a large amount of money. Because it comes from personal sources, it’s often a relatively modest sum. This money generally covers only the essentials a startup needs such as a business plan and initial operating expenses—rent, equipment, payroll, insurance, and/or research and development costs (R&D).The primary goal at this point is to attract more financing. This means catching the interest of venture capitalists and/or banks. Neither is inclined to invest large sums of money in a new idea that exists only on paper unless it comes from a successful serial entrepreneur.   How is Seed Funding different from growth-stage funding? Seed funding is the first stage of investment for a business – where the business could conspire of only a product idea and is still in the market validation process. Since the startup is in its early stages and often hasn’t yet proven its merit in the market, this funding generally involves risk on the part of the entity that is funding. But high risk also comes at a point when the startup’s valuation is at a low and has potential to scale and yield lucrative returns. As a result, investors bring in money at this stage through convertible preference share or common equity. They don’t prefer debt instruments with fixed interest rate burden on the startup since the early-stage startups are asset light with no validation of their business model. Grants are also a preferred instrument but is offered by Government schemes or competitions created for the purpose of promotion of entrepreneurship.  What are the challenges faced by Seed-stage startups? Product/Service: The product developed by the startup is in the idea validation stage with negligible brand value. Lack of access to funding makes it difficult for the startup to develop the Minimum Viable Product (MVP) which is required for field trail and market launch Customers: The startup needs to gain ground in terms of the market acquisition, market acceptance, and customer trust for the initial traction Processes: The founders generally don’t have the right expertise to regularise and formalise core team culture and to onboard the right human resources which makes up the Key Managerial Personnel Business Model: The startup faces challenges to define revenue channels, unit economics, and financial projections of the business  What should you know before raising this fund? Step 1 should ideally include a thorough evaluation of your startup’s market needs and customers. This is crucial for your business’s foundation and market research. Your pitch to investors should ideally constitute a well-rounded business plan, including a study on the competitors, SWOT analysis, financial projections, current and potential valuations, and growth prospects What are the different avenues to raise Seed Funding? 1.Incubators and Accelerators: Business incubators and accelerators are institutions, government-supported or privately held, that support entrepreneurs in developing their businesses, especially in the initial stages. These are institutions geared towards speeding up the growth and success of startups and early-stage companies. Incubation is usually done by institutions which have experience in the business and technology world. These institutions provide infrastructure/research facilities, administrative support, and mentorship.2.Angel Investors and Family Officers: Angel investors are wealthy private investors focused on financing small ventures in exchange for a stake in the business. Unlike a venture capital firm that uses an investment fund, angels use their own net worth. These are usually the first investors in a startup. These investors are driven by personal beliefs, demand higher control over portfolio companies, and have low ticket size investments.  3.Venture Capital Funds: Venture capital (VC) funds are managed investment pools that invest in high-growth startups and other early-stage firms and are typically only open to accredited investors. VC funds look out for startups that are highly scalable and have a huge target market. They also demand much control over their portfolio companies. It should be noted that all VCs may not focus on seed funding as they typically focus on companies already in market. 4.Government Funds: Funding from angel investors and venture capital firms becomes available to startups only after the proof of concept has been provided. Similarly, banks provide loans only to asset-backed applicants. It is essential to provide seed funding to startups with an innovative idea to conduct proof of concept trials.  DPIIT has created Startup India Seed Fund Scheme (SISFS) with an outlay of INR 945 Crore to provide financial assistance to startups for a host of requirements. SISFS aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization. This enables the startups to graduate to a level where they will be able to raise investments from angel investors or venture capitalists or seek loans from commercial banks or financial institutions FAQs What is seed capital? Seed capital refers to the initial funding or investment provided to start a new business or launch a new product. It is typically used to cover initial expenses such as market research, product development, and early-stage operations. Who provides seed capital? Seed capital can be provided by various sources, including individual investors (angel investors), venture capital firms, government grants or programs, crowdfunding platforms,