Whether you own a business or are the key person in that business, at some point you will either retire or an unexpected event may prevent you from performing your duties. It’s vital to be prepared for when that day happens.
Having aided the improvement, growth and succession of businesses for over 25 years, we have encountered many situations where succession hadn’t been planned for. What could have been a smooth transition was instead a lengthy and frustrating process that negatively impacted upon the running of the company.
Here’s our advice for effective succession planning:
- Explore every option
Become informed. Even if you plan to sell the business, it is still reliant on you as the key person/owner. Whatever you do will affect both the valuation and your timescales.
- When will you leave?
Choose a realistic date and work backwards. Ensure your pension arrangements are robust and workable within your chosen time-frame. If you plan to retain an income, arrange this carefully.
- What’s your strategy – to sell or replace?
If selling, have you got the skills and resource embedded in the business which enables it to be sold without being reliant upon you? If exiting, can you have the business managed and still rely on an income?
- How will you develop your successor?
How will you transfer all the knowledge and information required by your successor so that they can manage the business effectively following your departure? If you believe you could be the successor to a business, here’s how to go about it.
- Make a plan
Cover all aspects, including planned company restructure and a specific end point.
- Get on with it!
Start taking action now. It can take up to 5 years to realistically make the appropriate preparations.
Doing nothing is not an option. You are far more likely to achieve a successful exit and protect the continuity of your business if you start planning accordingly.