One of the major questions I ask business owners is: “Do you have a succession plan or exit strategy for your business?” I also ask employees: “Do you know if a succession plan or exit strategy exists in your company or organization?” You may be surprised to know that in my experience more than 90% tell me they have no succession plan or exit strategy. A 2004 CIBC Small Business Outlook Poll (conducted by Decima Research), indicated that 39% of small business owners plan to sell their business and 15% plan to have a family member take over. Yet, two-thirds (67%( of the entrepreneurs polled stated that they had not yet broached the subject of who will take over the company. To me that result is very telling and frankly is a motivator for writing this article.
Succession planning is a critical factor for the long-term success of any business. Leadership transitions in business affect the entire organization’s continuity, employee retention, client retention and returns on investment. It is essential to create and implement a process that creates visibility, accountability and greater integration of all facets of the business.
In another article, Your Strategic Thinking Business Coach provided seven (7) strategic actions to take to strategically structure a succession planning process. Those seven (7) strategic actions are:
Strategic Action #1: Begin the succession planning process early.
Strategic Action #2: Clearly determine and communicate the purpose, goals, and extent of the leadership succession plan or program.
Strategic Action #3: Clearly define the desired and required qualities of the new leader.
Strategic Action #4: Develop a clearly focused leadership development strategy.
Strategic Action #5: Develop a talent management process that will incorporate strategic thinking for specific development opportunities for future leaders.
Strategic Action #6: Identify future leadership candidates by developing a system for assessing current and future leadership needs.
Strategic Action #7: Identify a system for communicating information to ensure that the leadership succession and/or development programs are in line with strategic business needs.
After developing the list of strategic actions, it was important to develop an overall outline to present the strategically structured succession planning elements. That outline is as follows:
STRATEGICALLY STRUCTURED SUCCESSION PLAN OUTLINE I. Goals & Objectives Develop a vision statement for your business Develop a mission statement for your business Develop a list of your core values & guiding principles Develop short & long term goals for your business Identify the stakeholders for your business Develop your personal vision Develop your personal goals Develop your retirement goals Create a team of advisors for your succession planning effort Establish the need for a succession plan II. Exit Strategy Develop options for your exit from your business Review the developed options for your exit from the business Select your option for your exit strategy III. Business Valuation Obtain professional advice to determine the value of your business Determine the value of your business Determine a current value of your business assets & liabilities Determine the goodwill value of your business IV. Business Structure Identify and quantify your business debt Recruit & retain productive employees Structure business to maximize value Document key processes & procedures used in your business
V. Tax Considerations Develop financial goals Identify tax implications of your current business Plan & implement tax strategy to minimize your taxes VI. Legal Considerations Retain professional legal counsel Develop a buy-sell agreement for your business VII. Estate Plan Retain a professional estate planning advisor Develop an estate plan VIII. Successor selection Develop specific criteria for your successor Recruit & select successor based upon your criteria Communicate selection of successor to your stakeholders IX. Successor training Develop a list of characteristics and skills needed by your successor Develop a training plan for your successor Develop a coaching/mentoring plan for your successor Establish a timeline for your successor plan X. Contingency plan Develop a contingency plan (based on the “What Ifs?”)
Research & identify insurance needs (disability; personal life; critical illness; business; key person; etc.)
Select & train a key employee to take over in case of emergency or unforeseen event Communicate your plan to stakeholders & advisors XI. Implementation of plan Document the roles, responsibilities & expectations concerning the transition of ownership Identify a facilitator to make sure the process of succession is carried out XII. Timelines Identify your timeline for the management transition Identify your timeline for transition of ownership of your business Identify your timeline for your complete exit from your business XIII. Communication Plan Document the succession plan Document how to proceed with the succession plan in the event of an unforeseen event (accident, illness, death)
Document the transition or exit strategy to inform family, employees, clients, vendors, community & all stakeholders Your strategic thinking business coach encourages you to initiate your succession planning process NOW, NOT LATER, and to use strategic thinking in the development of your succession plan. If you would like to learn more about how to develop a strategically structured succession plan and how a strategic thinking business coach can facilitate and guide you in that endeavor, please contact Glenn Ebersole today through his website at www.businesscoach4u.com or by email at jgecoach@aol.com
A Strategically Structured Outline For Business Succession Planning From Your Strategic Thinking Business Coach - To learn more about this author, visit Glenn Ebersole's Website.
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