If you’re a small business owner, you probably don’t want to spend too much time thinking about what is going to happen to your business when you’re not running it anymore – particularly if retirement is a long way off.
But succession planning is important and can take years to properly sort and implement, so it really is never too early to start the process. Gone are the days when a small business owner could be assured of their children taking over when the time comes – young people tend to have their own ideas of what they want to do with their lives.
Still, having to make tough emotional decisions around family successors and long-time employees is one of the major reasons business owners tend to put off making succession plans.
The first step to take is to work out what your goals are in regard to yourself, your family, and your business. Do you want to still be involved as an owner or stakeholder, or sell up completely? And if selling is what you’re looking at, do you have any idea who might be interested in buying?
From there, you need to make sure your business is in good financial shape, or focus on remedial work if it’s not. CashManager can help with this by managing your accounting for you and giving you a clear picture of your finances.
If you have a successor in mind it’s best to get them established early. Not only do you need to ensure they know all the technical aspects of the work you do, you need to groom them to take over the running of the business, including maintaining business relationships. It’s also valuable to talk about their vision of the future of the business and see if it differs radically from yours.
Always consult professional advice throughout the succession planning process – this could mean financial planners, accountants, insurance advisors, and lawyers. Make sure you’re on the right legal and financial track.
And when you have worked out your plan, make sure it’s in writing. Discuss it with your staff and other people affected by it, and periodically review it. Your succession plan should be a living document that can be changed if your circumstances change.
The most important thing to remember is that the process takes time - properly done it could take years to arrange and implement your succession plan. But if done right, you can help ensure your business will continue after you’ve decided to spend your days relaxing.