Building a succession plan sounds like a big deal. While it is a significant step in the life of an entrepreneur and their business, succession planning is far from complicated. In fact, a basic plan that will be effective for a small business contains just three steps.
Here is a closer look at those steps and what they entail.
Step 1 - Create Your Exit Strategy
When you come to that place where selling your business is the most logical next step in your life, either due to health issues or retirement, you are going to go through a variety of emotions. Your attachment to your business will drive most of them, and it is important to understand that this is a normal reaction. Allow yourself to experience them but avoid decision-making currently.
Next, it is important to note that selling your business is a once-in-a-lifetime experience. It’s going to be difficult to know what is going to happen with the sale and after the settlement. The unknown is going to make you nervous. Expect that to happen but try to keep on track with your goal of selling and moving on.
Once you calm down and get back to the task at hand, to make selling your business easier, it helps to create a list of potential investors. Family and friends may be interested. A competitor may be interested. Also, plan for the possibility that the new owner may not have the cash flow to buy your business outright and will require staggered payments to complete the sale. This allows you to ease out slowly and work with the new owner to help them take over gradually.
Step 2 - Prepare The Business
Your business needs to be at the top of its game at this stage. That means ensuring staff is fully trained, technology is updated to current standards, and that the business looks attractive inside and out. Other tasks may include collecting financial data so a prospective new buyer can review it, fix and repairing whatever needs attention to add value to your business, maybe even expand a product line to increase sales and show the value-added aspects of this activity. Also, review workflows and tweak where necessary to increase efficiency and productivity.
Step 3 - Sell the Business
This step is much like selling a home. It will involve a broker, legal advice, lenders, open houses, and showings to potential new owners, and all the paperwork and details that accompany the process of selling a business. Provided you completed the tasks outlined in the first two steps, this part of your succession plan should move smoothly. Remember to be prepared in case your business does not attract the right kind of buyers immediately and give yourself time.
Why A Succession Plan Is Important
This is where your clients and customers matter most. When they are aware that a succession plan is in place, it gives them comfort knowing that dealing with your business during the process of a sale is not going to interrupt their business dealings with your company. It also tells them that the journey they have been on with you will continue, but with someone else making the major decisions.
How A Succession Plan Helps You, Your Family
A succession plan, as mentioned, is not just for when you decide to either retire or step down due to illness or other health issues. Having a succession plan also maps out the path to follow should you pass away unexpectedly, and your Will does not state that the business is passed down to family. Also, if you do not have family or friends interested in taking on the “family business” when you choose to step down. A succession plan protects your business and your clients/customers when it is time for a change in ownership.
Are You Considering a Succession Plan?
If you are unsure where to start with your succession plan, contact the best business coaching service in North Brisbane - Action Coach Business Coaching. They can advise you on the best way to approach passing your company on to a new owner when you have decided to move on. Action Coach Australia is your small business coach in Brisbane.
Conclusion
A succession plan for your small business ensures that your company keeps moving forward when you choose to step away from it, for whatever reason. It is not a complicated process and assists a new entrepreneur in getting into an already established business.