An effective succession plan requires the analysis of the current and future situation, not only of the business but also the individual owners. To commence the analysis process, the following QUESTIONS are listed for your consideration as they will certainly affect your future. 

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Things to Think About Regarding Succession

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A random selection of the ever-increasing media articles concerning succession would suggest up to 70% of small, particularly family-owned businesses in the US will be looking to change ownership in the next 5 to 10 years. This is a result of the “Baby Boomer” generation of business owners looking to retire in that period, all of whom will be seeking successors for their business ownership. 

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Important Questions:

 

• Had you always considered that the sale of your business would fund your retirement?

• Have you identified a successor?

• Will this person come from within the business or will you be looking to sell on the open market?

• Do you know all of the exit options that are available to you?

• Are you leading by example in balancing your work and business life?

• A key concern that is sometimes overlooked when considering succession is the impact that the change in ownership will have on customers. Have you taken this into consideration?

• Do you regularly compare your business performance with that of competitors?

• Can you use this information to grow your business and provide a competitive advantage to potential successors?

• Will you also potentially be competing for successors in the same market?

• Are you at risk of disgruntled staff leaving and establishing their own business in competition if your succession plan is not handled properly?

• Do you keep up to date with technological changes or improvements available to assist the way you do business?

• Is your business disadvantaged because of competitors being able to offer goods or services in either a more efficient or cost-effective way as a result of them embracing new technologies?

• Have you addressed all the items that drive the value of your business, these may not take considerable effort but may have a significant impact on the business sale price?

• How does your business currently measure the service you are currently providing customers? Have you ever undertaken a customer survey to report on feedback directly from the customers?

 

Quick Tip

 

A business that runs on systems and processes, therefore reducing owner reliance, is intrinsically more valuable than one that places a significant operational reliance on owners. Build a business that will allow a future successor to work “on the business” rather than “in the business” as an operation that is strategically focused and systemized will be more attractive.