Business Succession Planning Strategies
A common story that highlights the value of properly investing time into business succession planning is often highlighted by the story of the classic entrepreneur that started from scratch and is now faced with the task of planning the business for a future owner.
Many entrepreneurs watched their companies grow into successful money-making firms. When the idea of succession initially arises, many entrepreneurs and owners can find the idea of letting go difficult.
Memories of the challenges that you had to go through to get that business to where it is today can leave many feeling very emotionally connected to the business they created.
At times, you may not initially see anybody else that is fit to run your company as well as you did. Common feelings are that you are afraid that if you leave it to someone else it might collapse… However, many business owners that have gone through with the process of a succession will tell you that you do not have to worry as provided you have a sound business succession plan in place.
Sound business succession strategies consider the various strategies that are effective for running your business and makes sure that they are available to whoever takes over when the time comes for a change in leadership.
The key to successful family business succession planning is identifying the most suitable candidate as your replacement. It can be your son or daughter.
Take your time to know the candidate and start grooming them early if you realize they have the potential and the desire to carry through with the task at hand.
Alternatively, you can leave the business to a caretaker manager and make sure that your family is part of the board, and they are involved in making important decisions.
Wealth management principles dictate that you set long term goals for your company so that whoever takes over has some sort of a guideline in place.
That way, the business will maintain the same level of profitability after you step down because employees know where the business is going, and they will use the principles you instilled in them to achieve those long term goals.
Small business succession planning should be straightforward.
Let your successor and employees know why you are leaving so that they can get rid of any anxieties.
For example, if you don't tell your workers why you are stepping down, and they assume that you are terminally ill, it may reflect poorly on their performance.
If they were close to you, such assumptions might make them worried and unable to do their work well.
So, it is good strategy to always be honest with everyone.
Don't just assume that when you step down, the vice president of the firm will take over.
Business succession planning is a process that takes time. Start the grooming process as early as possible.
Expose your deputies to bigger challenges and give them more responsibility. Advise them when they are stuck and encourage them to always put their best foot forward without fear, after all you want them to learn.
No matter how hard it may be for you, there are times when it is always better to let go, embrace future opportunities and hand over your business to someone that can potentially steer it to greater heights.
Remember that stepping down does not mean that you lose your business. You can remain a shareholder and can influence important decisions.
Follow the above succession advice and guidelines if you want the leadership transition to be smooth and effective. To help you with all of the financial implications involved with a business succession, call Claudia Weisser or any member of her team today to make sure you are working with a professional that will take your situation to heart and more importantly help you look at different strategies tailored to you.
Should you need more information on business succession planning, feel free to call, we are glad to help.