You’ve created your company from nothing, put years of blood, sweat, and tears into its success, and now you’re thinking what next? It could be that you’re thinking of retiring or you want to move on to your next venture. If you don’t already have an exit strategy, now’s the time to think about succession planning.
Succession can mean handing over the reins to a new generation, or having someone in the wings ready to buy you out. Either way, you need a plan on how you’ll extract yourself from your business.
The first thing to ask yourself is, what needs to happen to prepare your business for handover? This could include:
- A complete analysis of financial and non-financial matters.
- Conducting thorough due diligence of business risks.
- Removing obstacles that might hinder succession planning.
- Looking at ways to enhance your company’s value (if you’re preparing for a sale)
Once you’ve identified what areas need work, the second thing is to create a set timeline of what happens and when. The most successful succession planning happens over years, rather than months, but it can be done in a shorter time frame, if necessary.
Passing the baton to family?
If you’re planning to hand over your business to a family member this still requires careful planning to ensure everyone in the family is happy with what happens next.
Before you develop your plan, gauge what different members of your family want from the succession process. This can help families work out how they feel, what different people want, what the business needs to thrive, how much money and equity is changing hands, and who gets what.
Then, create a family succession plan that recognises and accommodates the various needs, goals, and objectives of each family member. This will help avoid creating ill-feeling or upset, and takes everyone into account.
Selling the business?
You might think that selling is a golden ticket to a dream retirement, but there are a few things to think about first. There are many businesses available for sale at any given time, what makes yours different?
As mentioned above, you need to do an analysis of the business. You’ll also need to get the business valued for sale. This should be by an independent party, as there can be a gap between what you think it’s worth and what someone is willing to pay. Do this sooner rather than later so you know what you’re likely to get so you can identify areas to improve to make your business more attractive to potential buyers.
Succession is a journey
Analysing and improving your business is the start but you’ll also need good advisors to help you in this journey.
Get in touch with us to see how we can help you with your succession plan.