When was the last time you thought about what would happen to your business if you weren’t there any longer? Was it when your plane had a rough landing, or when you had that close call on the interstate? When it happened, what ran through your mind as your biggest concern – your family, your customers, your employees, your grandkids? Well, the good news is that with focused effort, you can create a business that is positioned to carry on without you, and you still won’t have to actually leave until you want to!
Preparing your business for your eventual departure may not be the most fun and entertaining thing you have done (although it can be), but it may be the single most important thing you ever do in your business and for your family and legacy.
Step 1
The first decision you need to make is who will run your business in the future – family, trusted insiders, or will you (or your estate) need to sell to an outsider? If the continuity of your business, your legacy, is important to you, then each one of these options can work if it is well planned. Once this decision is made, the steps are similar, and will take about the same amount of time to complete once you start.
If you plan to transition to family or insiders, you need to evaluate their skills, abilities, experience and leadership. Individual development plans will need to be created and followed so that the key individuals can be trained and coached to develop the skills necessary to run your company for the next 20 years. One more thing as well – you need to make sure they are interested in owning the business in the future!
If selling to an outsider, you can start reviewing who would be a good fit to own your company – a competitor, a supplier, a complimentary business in your industry, or even a current customer.
Step 2
Once you have an idea who you will be transitioning the business to, it is time to get together with your attorney, CPA, financial planner, and business coach to create a timeline and detailed plan of attack to ensure the smooth, financially sound transfer of assets over time with the minimum tax burden. Failure to plan your succession can be a disaster to your family, your estate, your employees and their families, and can hurt entire communities. Don’t let your family and employees be the ones everyone reads about in the sad story of the business that had to shut down because the owner was no longer available to run things.
Ensuring the continuity of employment and benefits to your employees helps them to be confident they are in the right place, and helps them choose to stay. Securing a long-term, consistent workforce lets your customer base know that they can count on you to deliver for them for decades, which helps them remain loyal to you and encourages them to bring you alongside them in their growth. Maintaining long term relationships with your customers and industry allows you to grow profitably both short term and long term, increasing the value of your business for you now, and for the future owners down the road.
All it takes is a few decisions, and then some people and process development to prepare the next generation of leaders for your team, your customers, and most importantly, you and your family.
Author, Mark McNulty, Business Coach in Louisville, KY