Planning the succession of your business is not easy. There are many things to think about when selling or passing on to a family member. By reading this article, you will learn why it is so important to plan your succession well and what elements to plan for. You can also download the ACM Succession Plan Template to begin your planning.
Why is succession planning important?
You’ve put so much time, effort, money, and sacrifice into running your business that it would be a shame if you couldn’t reap the fruits of your labor. The sale of your company corresponds to your pension fund, it is the money necessary so that you can carry out all your retirement projects.
Beyond the financial aspect, there is also the whole emotional aspect that comes into play. You probably don’t want to see all of your life’s work go to zero. In order for your business to continue to prosper over time, your succession must be well plan. What’s more, if you are lucky enough to have your business become a family heirloom, it is all the more important that the transfer goes well in order to preserve good family relations.
How to write your succession plan?
There are several questions you need to ask yourself about certain aspects of your business. Here is a non-exhaustive list of points to address in your succession plan.
The timeline
Succession can take 3 to 7 years to be ready to take over all of the company’s tasks. It is therefore necessary to plan your schedule well and start thinking about it in advance. It is important to set a date when the transfer of the business will take place and this date should not be move. In the case of the transfer to your child, you must stop telling yourself that he is not ready yet and you must trust him. Don’t forget that to compensate for your weaknesses, you have hired employees with the skills you lacked and that they will do the same to compensate for theirs.
The financial aspect
You need to figure out how much your business is worth so you can sell it for a fair price. Expert advice may be need for this step.
The type of succession
You will need to identify what percentage of your business you want to sell. For example, do you want to sell 50% of your business, 70% or 100%? Succession planning will not be the same based on this percentage. It is also necessary to determine which tasks you wish to abandon. Will it be more operations management or sales team management? The transfer of the business can be do gradually over the years and the responsibilities can be left, little by little, to the new owner.
The knowledge of the next generation
It will be necessary to establish what are the knowledge, know-how and know-how that the next generation will have to possess. Once these are on paper, you will need to confirm whether the prospect to take over from you has this knowledge. A training plan will then have to be built in order to fill in the missing knowledge. It will also be necessary to estimate the number of times needed to complete the training.
Finally, it is important to communicate with your internal employees in order to inform them of the changes that will occur in the administration of the company. They will be happy to be keep informed and this will avoid a lot of worries. The information will also need to be communicated to the company’s customers and suppliers in order to maintain good business relations with the new owner.
Succession planning is not always easy. That’s why smallbusinesscoach consultants are here to help. Contact us to plan your way.
