How to Begin Succession Planning

What are you really working for? Is it to build a legacy brand or to secure a restful retirement? In actuality there is no reason why you can’t accomplish both of those goals. From the moment we start working we look forward to the day when we can stop working.

Perhaps you have a bucket list that includes traveling, taking up a hobby or just reading every day. Whatever your retirement plans might be you want to make sure you the kind of financial security which will allow you to maintain a decent quality of life.

As for your business, you don’t necessarily want it to come to an end just because you’re ready to scale back. When it comes to your succession planning here are some of the steps you can take to be ready.

1.      Plan Ahead

Just as you plan on retiring some day from the moment you start working, you should also be thinking about how your business will carry on when you move on. This doesn’t mean finding a successor in the first year of your operation but it should be something that is always in the back of your mind. You might identify a particular executive who has the right stuff to take over some day. If so, you could start to groom them so that they can be ready to be a CEO.  Just don’t keep your intentions a secret. If you’re going to invest your energy into an employee let them know what you’re thinking. That will have them on the same page and working towards a common goal.

2.      Build the Right Team

As you already know, starting a business is not something you can do on your own. The same holds true for your succession. You need the same accountants, lawyer and advisors you used on the way up for your exit.

3.      Last Will and Testament

The worst case scenario would be for your business to carry on without your input because of an untimely death or debilitating illness. This is why it is essential for you to prepare a will. There might actually be a requirement in your corporation bylaws which states you have to have this type of document in place. Estate planning will allow you to designate the representatives you want to have in charge of your business. Keep in mind that there will always be opportunity to amend the document as conditions warrant but it’s best to have that foundation in place. This is also the reason why you should have a comprehensive insurance policy in place as well. Benefit payments could help with the continuation of a business.

4.      Think About Your Family

Many businesses become a family legacy with the ownership being passed down from generation to generation. Although noble, that isn’t always practical. If you do have children who you would like to take over the business make sure that is something that want to pursue. That last thing you would want is to force them into a career they have no passion for. 

What's Your Exit Strategy? How to Plan for a Graceful Exit From Your Business

Have you just started up a new business? Congratulations! Now you should start planning your exit strategy.  That might seem like you’re rushing things a bit but operating a successful business means you’re looking into the future for the day when you can either retire or sell off that business.

What’s your exit strategy? If you don’t have one you might think about these helpful tips to keep in mind for a graceful exit from your business.

Pick the Right Time

As you set out in your business, you should have goals. Your business benchmarks could be a certain amount of profit you get to put into your pocket or building some type of legacy that you want to pass onto your children. What’s important is that you sell your business at the right time not when you are forced to sell because of an illness. In other words, selling a business should be a major part of your business planning. It should be included as a component of your retirement plans and you don’t want to wait too long to enjoy your retirement.

Decide Exactly What You’re Selling

There are many moving parts to a business. These would be all the various assets that you own and control. Do you want to sell your business outright? This would mean transferring everything to a new owner.

If you can’t find an owner who wants to take over the entire business, you might be able to sell of the various pieces such as equipment, mailing lists or even a storefront. If you’ve built up a valuable brand or product that could be sold to a larger company.

Figure Out Your Business Value

This might seem like a no brainer but it could also be a bit of a reality check for you. You might think after all the hard work you’ve poured into your business that its value is enormously high. In truth, it might be valued at far less than you anticipated. This is why you can’t depend solely on selling your business when it comes to planning ahead for your financial security.

The moment you open your doors you should start saving in a retirement account. A professional valuator will be a big assistance in this matter.

Avoid Surprises

Getting your business ready to sell means you’ll be opening yourself up for inspection. As part of your normal business practices you should have been maintaining flawless accounting books so that won’t be a problem, right?

But if you have other assets like an office or equipment you’ll want to make sure they are all up to the code and functioning properly before asking someone to buy them.

Get Professional Help

You shouldn’t enter into the process of selling a business on your own, you should create a team to help you. Look for the assistance of corporate lawyers, accountant and bankers. In some cases, real estate agents can also be helpful. This is especially true if real estate is involved.

As important is it is to plan a startup, it is equally important to plan an exit.