When Should BUSINESS OWNERS Prepare a Succession Plan?Aug 20, 2022
By Darren Cherry
Have you ever noticed that when questions such as this come up, the most common reply is “it depends?” Well, this is not one of those times. According to 91% of business owners, the short answer is – Now, and here is why.
For a business owner, our certainty statement is as follows:
“the only thing certain in this world are death, taxes, and my business will transition at some point.”
The most understated fact about business ownership is that nearly 50% of all transitioned businesses are involuntary. Put it another way, almost half of all business transitions are due to one of the following 5-D’s: Death, Disability, Divorce, Disagreement, Dissolution.
Components of a Business Succession Plan
1.) Business Plan – in addition to growth initiatives, it should include enhancements to operating systems, standard processes, organizational structure to make the business easier to transfer.
2.) Owner’s Financial Plan - represents a holistic view of the owner’s required retirement funding and an attainment path.
3.) Owner’s Personal Plan – walking away from a business may well be one of life’s most significant challenges. This transition can be a lot easier by having clarity on what you will do in the next chapter. Just as in your business plan, this will involve a bit of Plan-Do-Check-Act.
Now I know that many of you reading this will say, “yea, but a business succession plan is something you do when you are getting ready to sell.” A better way of thinking about succession planning is a value growth engine that is integral to your strategic plan.
If you are a business owner that will depend on the sale of your business to finance your retirement, the good news is if you take action today, you can change the outcome tomorrow. The sooner you start, the more successful you will be at increasing the chance of you being able, when the time comes, to comfortable “Exit on Your Own Terms.”
If any of this resonates with you, let’s start a conversation.
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