As a business owner, your succession plan is one of the most important plans you can have — but most leave it far too late.
A comprehensive succession plan will include financial, legal and other factors that set out what will happen as you move out of the business and someone else takes charge.
Understanding them is vital to making sure you have the best chance of leaving your business feeling satisfied with what you’ve achieved.
The main purpose of starting early is making sure you have a plan under all circumstances because sometimes circumstances dictate that you leave a business hastily.
Ideally, you’ll have a nice, smooth transition away from your business — but it doesn’t always work out that way.
Sometimes you need to sell a business for financial reasons or to spend more time caring for an ill family member. Starting early ensures that you have a plan to fall back on.
Starting early also allows you the time you need to review and refine your plan as the business changes or more information becomes available.
But it’s important to note that a succession plan can take several years to execute, so being thorough is a must.
What each of us looks for in a successor will differ, so it’s important to think about what’s most important to you.
In every succession or sale I’ve seen, the most important part of the exit strategy for the departing owner was to believe the same level of service would continue for their customers well after the owner leaves the business.
That can’t always be guaranteed and is often an unrealistic expectation.
When choosing your successor or a buyer, there’s a lot you need to consider beyond pure technical ability:
Some of these factors are easier to measure and predict than others, but they all need to be taken into account.
The more time you take, the more questions you ask, the more likely you are to make an accurate assessment.
The challenge here is to discover what is right for your needs and the future of the business.
Be as clear as you can about what the right things are for your business, even after you’re no longer a part of it.
This step is particularly important and extremely difficult for most entrepreneurs.
You conceived and nurtured your business. It’s your baby. It can be very hard to trust that anyone else can care for it as well as you do.
Early in the life of Balance at Work, an adviser did me a great favour by asking me what my exit strategy was.
It was a confronting question because if you haven’t been asked the question it can be painful to be forced to consider the harsh reality of your business continuing without you.
If you’ve thought about your exit but avoided putting any structure around it, your plans are no more than wishful thinking.
Knowing how you would prefer to manage the transition is essential in any succession plan.
Whatever the circumstance, it is likely you’ll end up working in your (former) business alongside the new owner for a period.
The loss of authority might require a change of mindset for you, and for them if they were one of your team members before.
By agreeing on guidelines for managing the transition from owner to your new role, if you plan to stick around for a while, will help you avoid future tension and misunderstandings.
Starting early and knowing your goals will make it much easier to let go when the time comes.
By allowing enough time and choosing wisely, you may walk away with confidence and pride, rather than a sense of dread.
It’s never too soon!
Know your succession goals, enjoy the process and good luck!
This article was originally published on MYOB’s blog, The Pulse. For more business news and tips, visit www.myob.com/blog.
"The last couple of years at batyr has seen incredible growth and the Balance at Work team has supported us along the way. They have helped us improve leadership skills across the team by helping us source and manage mentors, and even engaging as mentors themselves. As a young and fresh CEO Susan has also supported me personally with genuine feedback and fearless advice to achieve great things."
Sam Refshauge - CEO, batyr
"We used the Harrison Assessment tools followed by a debrief with Susan, for career development with staff, which then allowed us to work with Susan to create a customised 360 degree review process. Susan has a wealth of knowledge and is able to offer suggestions and solutions for our company. She is always ready to get involved and takes the time to show her clients the capability of Harrison Assessments. "
Jessica Hill - Head of People and Culture, Choice
"Balance at Work are the ideal external partners for us as they completely get what we are trying achieve in the People and Culture space. Their flexibility and responsiveness to our needs has seen the entire 360 approach being a complete success. The online tool and the follow up coaching sessions have been game changers for our business. The buzz in the organisation is outstanding. Love it! Thanks again for being such a great support crew on this key project."
Chris Bulmer - National GM Learning and Development, ISS Australia
"We use Harrison Assessments with our clients to support their recruitment processes. We especially value the comprehensive customisable features that allow us to ensure the best possible fit within a company, team and position. Balance at Work is always one phone call away. We appreciate their valuable input and their coaching solutions have also given great support to our clients."
Benoit Ribe - HR Solutions Manager, Polyglot Group
"The leadership team at Insurance Advisernet engaged Susan from Balance at Work to run our leadership development survey and learning sessions. Susan was very professional in delivering the team and individual strengths and opportunities for growth. Susan's approach was very "non corporate" in style which was refreshing to see. I can't recommend Balance at Work more highly to lead employee and team development sessions."
Shaun Stanfield - Managing Director, Insurance Advisernet