Succession planning – it’s never too soon

For many people, the prospect of letting go of their hard won business is often too difficult to contemplate, so they put off thinking about exit strategies and succession planning and, as a result, are forced to act under less than ideal circumstances and fail to realise the full value of their business.

If you want to capitalise fully on your personal investment in your business, start planning early.

The owners of one business I worked with were always looking for potential successors whenever they made a senior recruitment and started serious planning seven years before they intended to retire.

I started working with them two years later and within three years their successors had virtually taken over running the business and since the founders left, well recompensed by their successors, the business has gone from strength to strength.

So, identify possible successors early and give them the experiences and training that will help them prove their worth and acquire the skills and capital necessary to take over the business. Also it’s generally not just about one person, so you should aim to develop a new management team so that they can hit the ground running when you let go.

Don’t be afraid to leave earlier than you planned either. If the new team is up to the job, they won’t want you hanging around.

It’s also a lot easier to  develop successors if the business is expanding and innovating.  Give them responsibility for new ventures and find a way they can earn equity through increasing profitability.

Be brutally honest about what you bring to the business and make sure the new arrangements replace what it will lose when you go. If it’s appropriate, overcome the potential leadership crisis (Google the Greiner Growth model) by creating more formal structures and performance management regimes.

Gradually introduce the successors to your key contacts so that they become the business face, not you.

Finally, line up all those professional advisers who can help ease your exit and maximise your returns; accountants, lawyers, HR specialists, financial planners, tax advisers, pensions and property specialists; but make sure they support you on your terms and contribute to your agenda. Take control.

If despite all this planning the chosen successors don’t make the grade, all the good work you have done will make it much easier to follow Plan B, a trade sale or merger or even a delayed retirement from a more valuable business.

Andrew Mason is the MD of Andrew Mason Consultancy Ltd

www.andrewmasonconsultancy.com

a.r.mason@btinternet.com

 

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