Every business is started with a good intention.
Although starting is always exciting, there is a need for the business foundation to be solid and include planning for several future circumstances and possible 'what-ifs.'
You never know what the future can come up with, thus there is the need for business transition and succession.
Regrettably, a lot of business people fail to plan for their end.
Interactions and Business Transitions
You have interactions with staffs, clienteles, customers, merchants and the community with many years of running your business.
These interactions are part of what has made your business successful irrespective of the sector, whether manufacturing, construction or professional services.
Let's say, for instance, you just suddenly shut down your business or sell it without informing your clients of over so many years.
Imagine the shock and anger it will leave on their faces.
Transiting business or succession can be successful when it is thoroughly planned and it will help your staffs, consumers or clients to easily switch to the new business or owners. People don't take change easily and you would want to avoid a situation where confidence is being lost in the business.
Your Staffs Are Your Main Strength
Transiting business or succession goes beyond the interactions you have with your clients as it also centrally concerns your staffs.
You need to get them involved with the succession plan; the question is how you plan to do it.
Unless your staffs are involved in the process, you are likely going to lose them as at when the new business owners take charge.
In several industries, the exit of the staffs that help you build a business will make the business itself to lose substantial value.
Look at the members of your team and see if there is someone you could pick and prepare as a successor.
Your staffs will find it reassuring if you have picked someone they already know and have worked with for so many years.
When you talk about the key factors in bringing into line your perception of the value of your business with that of the potential owners, they are a known successor and a succession plan.
The Need for a Plan and Planning To Retire
Some business owner might think they don't need a plan and that they might never retire.
Having a plan for transiting business or succession is not just about your retirement.
Just as in life, in business too, you never know what is coming so it might be better for you to standardize your process and systems just in case there is an unexpected or surprising turn.
What if you are faced with health issues and are incapable of running the business for weeks?
Who is going to act on your behalf?
Your business needs to be run in a way that it can continue to successfully operate whether you are there or not.
Have you been running your business for many years without having any plan made?
Don't worry; there are others like you too.
You would be surprised that financial planners too are guilty of that and have a hard time figuring out the prospect of business in years to come.
In the current report from FA Insight, less than 50% of advisory firms that were surveyed agreed to have a suitable succession plan in place.
This, however, doesn't mean you stop asking yourself strong important questions like:
What is your expected time frame (in years) to run the business?
Do you have any plans to sell it in the future?
What do you plan to achieve with the business in the future?
Are you running it as a family business?
Should something happen to you or whoever is in charge, which person will cover up?
How will other members of the family react to it?
Are you going to end the business as you retire or hand it over to someone else?
Who will it be?
If you are not sure of how to go about all of this, it is ok and expected.
Work on a plan little by little bringing out time for it daily or weekly as it suits you.
You plan doesn't have to be perfect; it is just a beginning process.
Run the issues you want to plan for in your mind.
You can also click here to seek the help of a financial planner or an attorney.
Review Your Plans
Once you have developed a transition and succession plan, do not see it as permanent.
As the business grows and changes so does the need for the plans to be revised and then the changes are taken into account.
In situations where you are the family head and in charge of the business, your first offspring might not necessarily be the most suitable person to take over the business.
Most times family businesses fail to last more than the second generation because when it comes to succession, presumptions are always made.
When there is no one in your family that is suitable to succeed the business, you might have to think about picking someone from outside the family to be in charge of some of the operations.
Similarly, if you share the business with others, you and the co-owner have to think about how to protect each other should one of you not be able to continue the business. Things like disability and death can cause it.
The plan should be clear to every owner as well as their family members, when and how the running of the business and succession can transfer in such situation.
Certain business owners are concerned that having a succession plan will threaten the ownership of what they have put up.
That, however, is not true as a well-crafted plan will safeguard your staffs, clients and business value.