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Thinking about handing over the reins of your business? It is a big step, isn’t it? Let’s talk about what it really takes to create a successful business succession plan.
First off, what does a successful transition even look like? It is not just about picking a successor and calling it a day. It is about ensuring your business thrives, even when you are no longer at the helm. So, where do we start?
Let’s tackle the emotional side first. How do you feel about letting go? It is not easy to step back from something you have built from the ground up. But remember, it is about passing on your legacy, not just handing over the keys. Are you ready for this shift, not just in your business, but in your life? This emotional readiness is often overlooked, but trust me, it is the bedrock of a smooth transition.
Now, who is going to take over? This is where things get tricky. Are you considering a family member, a long-time employee, or an outright sale of the business? Each choice has its own set of challenges and opportunities. Think about it – does your chosen successor have the passion, the skills, and drive to take your business forward? And here is a tough question – are they really interested, or are they just not wanting to let you down? It is crucial to have these frank conversations early on. Or, if you are going to sell your business, is it important to you that your business carries on in a comparable way, with similar values to the ones which you have operated it?
‘Training and Development’ – these are not just buzzwords. Your successor needs to be groomed for success. This might mean formal training, mentorship programs, or gradually increasing their responsibilities. You did not build your business overnight, and similarly, your successor will not be ready overnight either. Even if you do not intend on handing your business down and simply selling to the highest bidder, having strong leadership to take over when you step away typically adds significant value to the buyer.
Let’s talk about the legal and financial aspects. It is not the most exciting part, but it is absolutely critical. How do you plan to transfer ownership? Is it a straight asset sale? What are the tax implications? This is where professionals come in – your lawyers and accountants. Have you heard of strategies like estate freezes? They can be quite handy in ensuring a fair and financially sound transition.
Have you considered all your children or stakeholders in this process? It is a delicate balancing act. How do you ensure fairness, not just in terms of finances, but also in terms of emotional equity? No one wants family dinners turning into boardroom disputes, right?
Lastly, have you thought about what your role will be once you step down? It is not uncommon to see former owners struggling to let go completely. Finding a balance that allows you to step back yet remain involved in some capacity can be key to not only your peace of mind but also to the smooth functioning of the business during the transition phase. And if your business is sold outright, are you ready to go from a hundred miles an hour to a dead stop, having to find things to fill your day?
Creating a successful business succession plan is more than just a handover. It is a careful blend of emotional readiness, choosing the right successor or purchaser, training and development, legal and financial planning, and managing family dynamics. Start early, plan meticulously, and, just maybe, you can make this transition as remarkable as the journey that got you here. After all, isn’t securing your legacy what it’s all about?
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Michael Suter is a Certified Financial Planner (CFP) and a Certified Executor Advisor (CEA) with over 20 years’ experience as a senior leader and past printing company owner. He leads the Mergers and Acquisition division of Connecting for Results (CFR). To work with Michael, contact us.