What is business succession planning, and why do it? If you conduct a Google search on this topic, you will get many different answers to these two questions. But succession planning isn’t all about selling the company; that’s just one of the many solutions.
Before deciding on a solution, there are some important questions you need to ask yourself. For example, will you transfer the business or choose another strategy? To whom should the business be transferred? What is the right timing to proceed with the transition?
In my eyes, there is one guiding theme to answer all of the above questions. Simply ask yourself, what achieves the owners’ goals with regards to the future ownership of the business? By contemplating this, you will come up with the best solution for you and the company at large.
Nothing can be accomplished until the owners spend time determining and communicating their goals with regards to the future ownership of the business.
Make sure the following areas are consistent with such goals:
- The governance system
- The management team and its succession
- The strategic planning system
- The ownership’s plan and expectations
- The owners’ estate plans
Failure to get these addressed and aligned can result in various ramifications such as family disharmony, loss of key personnel, lawsuits, forced sales, excess taxes and most importantly, inability to achieve the owner’s goals.
I believe each owner should assemble a team to address the succession plan, and allow those involved to hold ownership accountable for their part of the process. Easy to say, hard for entrepreneurs to do.
If you don’t put in the effort, don’t complain about the consequences.
This week was the anniversary of the September 11th attacks, a tough day for many Americans who lost loved ones. But also a proud day for our nation as we pulled together to deal with the tragedy.
My wife and I have a son serving and deployed in Afghanistan, continuing the fight. We are so proud of all the young courageous members of our military. God bless them all.