“It is never too early to start the journey but it is often too late”
– Bob Neill
To leave a lasting legacy, succession planning is not optional. So why do so many businesses neglect it until it is too late?
Succession is the convergence of many complex issues: some financial and others emotional. Businesses are not just financial assets, they are the cumulative sum of years of passionate hard work, and nobody really wants to think about what will happen after they let go.
But therein lies the reason that you need to plan for it: your business will exist after you exit from it, and you want to preserve the success you have strived for. If you do not plan your legacy, there will be serious disruptive consequences: in terms of financial value, continuity of operations, and the all-important intangible emotional value.
The first– and perhaps most obvious– implication of insufficient planning– is financial loss.
Whether you choose internal or external succession options, you cannot achieve your vision for the business if you rush this process. The market will have a large influence in determining the value of your business, and the right moment to sell may not fall perfectly within your ideal retirement timeframe. Even with internal successions, which will spread over a period of time, the value may fluctuate from stage to stage and you will need time to understand and negotiate the implications that come with this issue. But succession planning is not all about economic value realisation.
Addressing succession planning often involves addressing a deep-seated fear within business owners: a sudden exit from the business due to illness or similar incapacitation. Tackling this anxiety head on, however, ensures that your business and the smooth-running of operations are protected, should the very worst occur. If you don’t take the opportunity to work through this multi-faceted issue, financial ruin is a very real danger for your enterprise.
A final, yet by no means insignificant, consideration is the emotional attachment you have to your business. After you exit the business, you want to feel proud of the legacy you have created. And you want to feel secure in the abilities of those appointed to run it after you have left, or of the people you have chosen to sell the business to. Perhaps you want to negotiate partial involvement– perhaps working with some key clients– for a few years after your formal exit from the company. Whatever your goal, it starts with a conversation. Anyone can crunch the numbers, and do the necessary arithmetic. But not everyone has the experience and the patience to understand the nuance behind the succession process, and it is these subtleties that set your business apart from the rest.
To establish a lasting legacy that you and your family can stand behind, your simple first step is that human conversation. And, we assure you, the first step is always the hardest. This is why we work with you to create a customised plan that achieves your goals, and enables you to exit the business at your pace.
Succession planning is a journey: don’t make it a rushed one.