Why succession planning is one of the most difficult issues successful entrepreneurs face
As I get older, I am more aware of the fact that one day I could get hit by a bus and what then? Some people don't like to think about it and so they never do anything to put their Estate's in the right order, and the mess is left for whoever is mourning your no-return.
My business is scalable, robust, international and has enormous potential and at this point in time, not a bad valuation. I run the business, largely with my internal Accountant with advise from a few senior members of the team - as we have a flat organisational structure.
I never make a decision without consulting the key people in the company, and in many cases I include everyone in decision making processes.
So, what if I died. What would happen?
Right now, everything is in order except what happens to the business. I have a responsibility to the people that work for me to give them a job until they no longer want it, or they leave for bigger and better things. It needs to be in place that it is business as usual and finally it has occured to me that it is possible.
I have a family member who has shown great aptitude for growth and development, a firm understanding of the business, empathy for other staff members and drive to do her best. She is far too young, only 20 years old, but in years to come, it would make sense to start the coaching process to ensure that she may take the lead should anything happen to me.
It's not a great conversation to be had, but every business needs an exit clause, and it may be to sell. But if you are gone, will the business sell at a value that it is worth or will a potential buyer pull the wool over your families eye's? These are the real things that you have to consider.
Here are 3 things that matter most:
- That your finances are in order and no-one is left with a mess. To leave a mess, you are just being selfish and self-centered and that is not nice, fair or kind in any way. Your family or whoever you leave your will to deserve to have time to mourn you, and the last thing they need to think about is your financial or business commitments.
- Succession planning requires a lot of thought. Maybe someone in your family is not suitable and doesn't have the drive, ability or passion to see the business go from one generation to another. Perhaps it's best left in the hands of someone who already works in the business that is more capable. Maybe it is best sold rather than having any succession planning in place. If you choose the latter, work out who the buyers are and start conversations long before you ever think you need to. Get valuations on your business that are independent year after year.
- Write a family or succession planning book. Know what and why decisions are made and with whom. Document who is a trusted party and who to be wary of. Include as much detail as possible.
No-one ever wants to think this way, but the truth of the matter is that if you own a business, you have to be thinking about these things whether you like it or not.