Your Business – Sale or Succession?
We’re a passionate bunch, aren’t we! Of course, I am talking about SME owners who live and breathe their business. Whilst this level of passion is necessary to enable us to push through the many difficult times that we have as business owners, it can cause blindness, particularly when it comes to planning our business succession.
Many business owners are inclined to leave their succession too late and will end up “selling their business” rather than “succeeding out” of it.
This often causes two issues:
- The financial return is not optimised; and
- The business is left without the structure, skills and momentum that is required for it and the new leaders to succeed
Three of the keys to effective business succession are:
Post Business Purpose
As the business owner, you will need to be very clear on what your own future looks and feels like once you have left the business. What will you replace the purpose of your business life with? We have seen business owners unconsciously “sabotage” their own business succession because they don’t have this sorted!
Start Early – Be Deliberate
It takes time to prepare a team to take over the work that you have been doing. How much time? Often 2-3 years are necessary to fashion a business into the best shape for succession. You will need a deliberate program to de-risk, to optimise the financial performance and to develop the leaders that will be your next generation. It is also very important to remember that the risk of an unplanned succession increases the longer that we stay in the business.
Refine your Role
It’s a difficult thing to do, but joyous to be a part of seeing business owners refining their role – often from an operational/in-charge type role to more wisdom and business development roles. In many cases, this has prolonged the time that the business owner spends in the business and ends up as a softer exit. This provides a better transition for both the business owner and the business. We have worked with many businesses through their succession planning and execution and have been excited to witness how beneficial a well-planned business succession is for all concerned.