3 Quick Business Networking Tips
I had the pleasure of being interviewed by O'Neill and Associates about business networking. It…
Dennis A Charles 10/26/2016
Why is having an effective succession plan essential for your business?
You’ve poured your heart and soul into building your business over the years. Essentially your business is an extension of you, a living breathing entity that at some point will need to transform into a business that runs without you. You may sell or pass on your business to your heirs, you may succeed it to a key employee or employees, or you may sell it to an outside party. Whatever you choose, their are implications for you and your family.
Assumptions over even the most basic decisions can lead to bad feeling and in my experience, when assumptions and emotions are mixed, the results are nether pleasant nor desirable.
Things to keep in mind:
Ideally you need a ten year plan. Yes, you read that right, a ten year plan. This plan will be your roadmap for It needs to be written. And like with any plan, things change, and that’s to be expected. The thing is, if you have a course and a destination in mind, it is much easier to reset . If you have no course and no destination, you are in essence a ship without a rudder.
So you might not have ten years. That’s ok. The second best time to begin succession planning is right now. For a variety of reasons (day to day operations/ making tough emotional decisions/ thinking about your mortality/ any number of reasons you can find not to do the work) it is easy to put planning off. Or you may think that you’ve got it covered because you know in your head/heart what will be best for your business and those involved. This is the exact recipe for disaster. Start planning sooner rather than later, and it is essential that this becomes a written document.
2) Consider the long term implications for your family.
Whatever way you look at it, there will be emotions involved. There will be jealousies, perceived injustices and unfairness, a sense of loss, a sense of overwhelm. You may well have a sense that whoever takes over from you is doing it wrong or doing it differently. There will be unexpected turns of events, and some people will not cooperate, because they have their own ideas and agenda. This is ok, and it is much better to be prepared and to have the challenging conversations ahead of time. The exchange of power and large sums of money can shake the foundations of even the strongest family foundations, my recommendation is to do the work necessary to ensure that your family system stays intact, regardless of what happens to your business.
3) Tax implications.
Full disclosure, I’m not a tax attorney, and my exact knowledge of tax matters is minimal. Again, the sooner you begin working with someone who is .an expert in this field, the more of your business you can keep for you and your family. There are numerous ways in which you can avoid a tax penalties with good, sound long term planning.
Every succession plan will have the following
Your roadmap needs to clear be for all stakeholders. To ensure continuity and a smooth transition, they want to be part of the process every step of the way, and the only way that can happen is
Succession plans for family businesses . Meet regularly and hold those . Let them know that their input and buy-in is essential that firstly you make the commitment.
3) Education- there needs to be full training for whoever takes over the business. You should also educate yourself as fully as you can about the process. A great place to start is Rothwell’s Effective Succession Planning. https://www.amazon.com/Effective-Succession-Planning-Leadership-Continuity/dp/0814414168 It is a pretty dense read, but
. Find out about, you cannot have too much information as you
Also, my recommendation is to not attempt to do this alone. Bring in professionals. This will save you from being “penny wise but dollar foolish”. Maybe there is a communication breakdown within the interested parties. If this is the case, bringing in a professional mediator will be the place to start. Use outside help from a coach to bounce ideas off of to hold yourself and other stakeholders accountable.
While it is desirable to have a coach or mediator , it is essential that you bring in qualified tax professionals and lawyers to guide you through the tax and legal implications of your business transfer.
Best of luck with what can be a challenging but exciting time for you in your life and your business. Remember the old aim that prior preparation prevents poor performance. The stakes are high, but with the right mindset and a solid team of professionals around you, you can sleep soundly at night knowing you are doing the right thing for your family and leaving a lasting legacy for your family to be proud of from all of your hard work in building your business.