There is always something urgent to take care of in business, particularly if you’re the person in charge.
This is the main reason why succession planning tends to get pushed right to the bottom of that never-ending ‘to do’ list. While we all know how important it is to plan for the future, the need to address present issues simply takes over. Not to mention the fact that when things are going well, it’s all too easy to believe that you will go on forever.
However, all business owners will benefit from devising a plan that details how they intend to exit the company, such as via sale or by passing on the reins to the next generation.
A good succession plan will bring both reassurance and relevance, because it will clearly define your intentions and help you align your business strategy accordingly. This will help you to meet your financial needs well into the future, as well as securing a smooth transition for your employees.
Here are some key points to consider for your succession plan:
Succession planning must form part of your longer-term strategy
A good succession plan considers the long term and will work towards the achievement of a specific goal, set at least five years into the future.
For example, if you are nursing a vague idea about selling your business, consider that you will have to prepare it for sale. How long are you likely to need to do this successfully?
You may also need to assess the existing talent within your business, and whether it is able to support your future plans. If your current employees are not appropriately skilled, you may need to invest in training or additional staff.
What is the value of your business…and what do you want from it?
Consider how you will gain the maximum value for your business. You will most likely need to ensure that it can properly support you and your family in the future, as well as enabling you to move on to the next exciting chapter of your life.
If you are unclear as to the current or possible future value of your business, arranging an appointment with your bank or accountant is a good starting point.
Who are the potential future owners?
If you are in charge of a family business and would like it to remain that way, you will need to think carefully about your family members’ strengths and potential limitations. Are they capable of stepping up and taking over from you?
If you are planning to prepare your business for sale, it will be helpful to think about who might take over. Don’t forget about your existing partners, directors and employees, as some may well be ready to buy in the future. This could help to ensure a stable transition as you move on, as well as keeping your key people motivated towards an exciting future goal.
Remember that you will need to continuously revisit your succession plan, in order for it to remain effective, and so as not to waste all your hard work.
Our specialist team works in partnership with businesses both large and small, helping them plan to achieve their future goals. If you would like to discuss your own succession plan in further detail, we can help – simply contact us to arrange an informal meeting.