There. You just took the first step of succession planning.
It’s a tough topic for most business owners. But it comes up a lot in the meetings I have with clients and prospective clients. So many business owners I speak with have put off the succession planning discussion for too long, and they know they need to get something in place to preserve their retirement and their legacy. In this short article, I hope to illustrate why this is such an important discussion to have with your stakeholders, and also to provide you some ideas to get the conversation started.
Ok, so let’s start off with why this is so important.
Good Succession Planning Reason One: RETIREMENT.
If you’re like most business owners, you have worked your entire life to build your business, and you likely have put a lot more money into the business than into your retirement. Perhaps the plan is to eventually sell your business, thus providing the funds for your retirement. This can work, but it can also cause problems depending on the type of business you have, as there can be significant obstacles and time factors in selling a business. Also, if you “are” the business, then you face an additional set of challenges when attempting to sell.
Good Succession Planning Reason Two: YOUR STAKEHOLDERS.
Having a solid succession plan in place ensures that your employees, your clients, and the business you built are well taken care of after you are gone. If you are like most business owners I speak with, you don’t want to just sell your business to the highest bidder. You want to make sure that whoever owns and operates your business going forward is going to take care of all of your stakeholders (employees and their families, clients with whom you’ve built close relationships over the years, and even the communities you’re in). You’ve worked hard through the years to build and maintain your reputation… you don’t want to see all that diligence wiped out through a change of ownership.
Starting the Succession Planning Conversation
Having a succession plan is important for many other reasons, but let’s move on to how to start the discussion on succession planning. It all comes down to you committing to the process and taking the first step (after the one you took in the headline.)
A good place to start is speaking with your family members, including children, about their interest in taking over the business. You might be surprised at what you discover during an honest discussion about who may (or may not) want to continue the family business.
The next option might be a trusted employee, or a core group of trusted employees, who you think might be interested in carrying on the business. This can be a good option because they have probably worked with you for a while, so you’ve seen them work, and you likely know whether they will be good stewards of the business.
Other options include selling your business to a competitor or a supplier, use a business broker to sell your business, or placing golden tickets in candy bars across the globe. Although I don’t recommend the latter unless you are independently wealthy, own a huge candy factory, and have close ties to the Oompa-Loompa union.
So when you are ready to really focus and commit to getting something done, there are many professionals who can help you through the process, including many of your existing advisors (such as your banker). Choose someone you trust to work with. And then DO IT! Pick up the phone. Send an email. Nudge me at a pancake breakfast and give me that “I think I’d like to start the succession planning process” look.
Sure, these can be difficult conversations. But it’s better to start earlier rather than later. These processes can sometimes take years to formulate and execute. And as John F. Kennedy said, “Change is the law of life. And those who look only to the past or present are certain to miss the future.”