If you run a successful business you may have wondered what you are going to do when the time comes for you to voluntarily or involuntarily retire – then ensuring your business survives and flourishes. Succession planning is important if you want your business to continue after you are gone.
There are a few steps you can take to make the process easier.
(1.) It is never too early to start planning for retirement which includes planning for your business. One of the most important things you can do when you begin succession planning is to obtain an accurate valuation of your business and keep it updated. Knowing your businesses worth will protect your business in the event you must sell or pass it to your heirs unexpectedly. When the time comes for you to retire, already knowing the value of your business will make selling it (or passing it down to family) that much easier.
(2.) It is also important to identify who will be responsible for the success of your business and to determine who has the skills to effectively run your business. The person you want as the new owner may not have the necessary skills to successfully run your business in which case you would have to assign someone else as the manager in charge of business operations. Remember to prepare your successor by providing training, hands-on experience, support and coaching. Tip: Hire a professional HR firm to handle this as it provides a good 'arms length' argument should you need one.
(3.) Because business success affects not only you and your successor, but your employees as well, it is important to address any concerns they may have during your planning. It is important to reassure employees that their position with the company is safe, or if it will be changing it is important to be open and honest from the beginning. Remember open communication and transparency is key to company survival.
(4.) Even the best laid plans may not always work, so ensure you plan for contingencies – develop a 'Plan B'. For instance, if you plan to leave your business to a family member, what happens if they are unable to inherit it because of death or decide they do not want to run the business?
You need time, careful thought and patience to work through a success plan. Last piece of advise – consult with the appropriate experts with respect to your succession planning: your tax adviser / accountant, your banker, your Human Resources expert … they will help the company to not only survive but thrive and you can ride into the sunset, guilty-free and comfortably!