One of the major questions I ask business owners is: “Do you have a succession plan or exit strategy for your business?” I also ask employees: “Do you know if a succession plan or exit strategy exists in your company or organization?” You may be surprised to know that in my experience more than 90% tell me they have no succession plan or exit strategy. A 2004 CIBC Small Business Outlook Poll (conducted by Decima Research), indicated that 39% of small business owners plan to sell their business and 15% plan to have a family member take over. Yet, two-thirds (67%( of the entrepreneurs polled stated that they had not yet broached the subject of who will take over the company. To me that result is very telling and frankly is a motivator for writing this article.
Succession planning is a critical factor for the long-term success of any business. Leadership transitions in business affect the entire organization’s continuity, employee retention, client retention and returns on investment. It is essential to create and implement a process that creates visibility, accountability and greater integration of all facets of the business.
In another article, Your Strategic Thinking Business Coach provided seven (7) strategic actions to take to strategically structure a succession planning process. Those seven (7) strategic actions are:
Strategic Action #1: Begin the succession planning process early.
Strategic Action #2: Clearly determine and communicate the purpose, goals, and extent of the leadership succession plan or program.
Strategic Action #3: Clearly define the desired and required qualities of the new leader.
Strategic Action #4: Develop a clearly focused leadership development strategy.
Strategic Action #5: Develop a talent management process that will incorporate strategic thinking for specific development opportunities for future leaders.
Strategic Action #6: Identify future leadership candidates by developing a system for assessing current and future leadership needs.
Strategic Action #7: Identify a system for communicating information to ensure that the leadership succession and/or development programs are in line with strategic business needs.
After developing the list of strategic actions, it was important to develop an overall outline to present the strategically structured succession planning elements. That outline is as follows:
STRATEGICALLY STRUCTURED SUCCESSION PLAN OUTLINE
I. GOALS & OBJECTIVES
Develop a vision statement for your business
Develop a mission statement for your business
Develop a list of your core values & guiding principles
Develop short & long term goals for your business
Identify the stakeholders for your business
Develop your personal vision
Develop your personal goals
Develop your retirement goals
Create a team of advisors for your succession planning effort
Establish the need for a succession plan
II. EXIT STRATEGY
Develop options for your exit from your business
Review the developed options for your exit from the business
Select your option for your exit strategy
III. BUSINESS VALUATION
Obtain professional advice to determine the value of your business
Determine the value of your business
Determine a current value of your business assets & liabilities
Determine the goodwill value of your business
IV. BUSINESS STRUCTURE
Identify and quantify your business debt
Recruit & retain productive employees
Structure business to maximize value
Document key processes & procedures used in your business
V. TAX CONSIDERATIONS
Develop financial goals
Identify tax implications of your current business
Plan & implement tax strategy to minimize your taxes
VI. LEGAL CONSIDERATIONS
Retain professional legal counsel
Develop a buy-sell agreement for your business
VII. ESTATE PLANS
Retain a professional estate planning advisor
Develop an estate plan
VIII. SUCCESSOR SELECTION
Develop specific criteria for your successor
Recruit & select successor based upon your criteria
Communicate selection of successor to your stakeholders
IX. SUCCESSOR TRAINING
Develop a list of characteristics and skills needed by your successor
Develop a training plan for your successor
Develop a coaching/mentoring plan for your successor
Establish a timeline for your successor plan
X. CONTINGENCY PLAN
Develop a contingency plan (based on the “What Ifs?”)
Research & identify insurance needs (disability; personal life; critical illness; business; key person; etc.)
Select & train a key employee to take over in case of emergency or unforeseen event
Communicate your plan to stakeholders & advisors
XI. IMPLEMENTATION PLAN
Document the roles, responsibilities & expectations concerning the transition of ownership
Identify a facilitator to make sure the process of succession is carried out
XII. TIMELINES
Identify your timeline for the management transition
Identify your timeline for transition of ownership of your business
Identify your timeline for your complete exit from your business
XIII. COMMUNICATION
Document the succession plan
Document how to proceed with the succession plan in the event of an unforeseen event (accident, illness, death)
Document the transition or exit strategy to inform family, employees, clients, vendors, community & all stakeholders
AUTOPOST by BEDEWY VISIT GAHZLY
