When building and maintaining a business, not many owners have the time (or feel like they have the time) to think about what will happen to their business once they have retired or sold it.
However, business succession planning is crucial to where your business is headed. Putting a proper succession plan in place ahead of time will not only help of your company’s health now, but down the line too.
But before making a succession plan, let’s start with the first step. You need to reflect on your ultimate goals, personally and professionally.
Here is a list of 10 important questions to ask yourself before and during the succession planning process:
1. What would make you leave the business?
With the retirement age rising, many people are choosing careers that they enjoy and can see themselves doing for a long time. So what would make you leave your business?
Retirement, family, travel, new business opportunities? List out some of the main reasons you can see yourself leaving the company. Perhaps, you were interested in making a quick buck by building up the business over a few years then selling it, like so many of today’s e-based businesses are doing. Even at that, you want to go out with a “Bang” and ensure you get the right buyers. For this, you need a good succession plan in order.
2. Is this business your life’s goal or accomplishment?
Starting your own business demands constant hard work and effort. Think back to when you first decided to take this giant leap. Did you expect to see your company where it is now? Are you proud of where you are today? How much is this business a part of you?
These are again some deep and important questions to ask yourself as your response to them will help you determine which potential successor could really share your vision and fill your dedicated shoes.
3. What is your business worth?
Your company has a dollar value, but is this enough for you? If your company has intrinsic value than you may need a higher price tag to make the sale worth it for you. It’s key to start by speaking to finance advisors who have experience in your industry to help you determine a price that would be suitable to you and the buyer.
4. Who can handle your business?
Assuming you want your business to prosper after you have handed it off, who has the skills and knowledge that you have to run it like you do? Is there anyone internally who could fill your shoes?
Then again, you have to be prepared for the fact that a successor may not run the show your way. But this doesn’t mean they don’t have something else to offer. One of the prime keys to success in business is the ability to adapt, evolve and handle change.
Don’t just look for another you, think about important qualities you want in a successor. Vision, imagination, loyalty, dedication… Look at the big picture.
5. Will you have regrets?
It’s hard to know what our future selves will be like, but when it comes to questions of regret, you need to think really hard and examine all the possibilities. The last thing you want to do is regret a decision as important as leaving the business. Again, assess your professional and personal goals and ensure they are being met when you make this big decision in your career.
6. How long will you stay involved with the company after the sale? Will you stay involved?
Maybe you can’t completely detach from your business and that is more than okay. But planning your involvement post-sale is an important factor that needs to be discussed throughout the proceedings and carried out accordingly to prevent any issues in the future.
7. What kind of training will you offer?
There are many ways to train your successor, but the way to get the best results from the person is to train them over a longer period of time rather than throw them into it last minute. This is a major aspect of succession planning. Being prepared.
Keeping documentation of processes and anything involving how your company works will help your successor understand how you operate the business. But reading about policies and procedures is only one part of it. Perhaps consider them training in many positions at different levels at the company so they really understand the inner workings of the business.
8. Will you be comfortable with radical changes?
As mentioned, your successor may attempt to make some significant reformations to your business model. Can you stomach this, even if it differs from your original view of the business? If not, your hunt for the right successor will have to continue.
9. Will you want to retain minority ownership as an investment?
If so how much control will you attempt to exert? Remember that it can be hard to control yourself if you have run this business for years.
10. Will you start another business like this or are you looking for another path?
After the sale of your business, you might feel at a loss after such an important and consuming part of your life is gone. However, a new business or career may give you stronger direction and purpose.
Ask yourself these important questions. They will not only help you in planning your succession, but with your career aspirations overall.
