When There's No Apparent Heir
10 Steps to effective Succession Planning
By Theodore P. Burbank, FCBI
Do you sometimes find yourself wishing you were an employee and not the boss? As
the boss you aren't concerned with being fired, but -- neither can you quit. Too
much depends upon you for you to even consider quitting. The business you worked so
long and hard to build, your employees, their families and yours, rely upon you to keep
the ship on an even keel.
Perhaps you have read articles on succession planning - how to pass the baton to family
or employees. However, the kids don't seem interested in taking over and you don't
have an employee who could fill your shoes. What to do?
Somehow the thought of selling your business is distasteful to you. Perhaps
because the business is a reflection of you. It reflects your vision, personality
and dreams. The business is almost like a child in that respect. You don't sell
children, do you? Certainly not, but as the child matures natural forces of nature
call for a change. Eventually the child marries and begins a new family. The
new family contains elements that are a reflection of you. This is the way our
values and principles continue.
Succession Planning is very much the same in that the suitor has to be the right
person, one who will do right by the business. In addition, you will expect a
handsome dowry before you give your approval and let the new operator take over.
Ten Steps to Effective Succession Planning
Face the reality that both you and your business are constantly changing.
Eventually the needs and requirements of your business will conflict with your
personal lifestyle needs (See One Minute Quiz for Business
Develop some non-business interests. Make time to develop these outside
Begin to establish financial resources independent of your business. Take
advantage of opportunities outside the business as well as tax advantaged retirement
Start sooner, not later. Transition takes time. You have a lot to do
before you can let go.
Identify your ideal replacement. Only when you understand what your company
is today can you identify what it could be tomorrow. List the skills, interests,
talents and resources your successor must possess in order to capitalize upon the
opportunity your business represents.
Prepare the business for transfer. Take stock of those areas where your
personality, skills or influence are key elements of your firm's success. Begin a
program to transfer these activities to others within the company.
Review the company's financial statements. In most private companies the
need to show a profit is overridden by a desire to minimize taxation. Make sure you
and/or you accountant hasn't done this job too well. It is important for a wary
suitor and his/her advisors to be able to easily identify the discretionary and non
recurring expenses that can be added to profits.
Trim or eliminate those activities, expenses and personell that exist essentially
to satisfy your personal and/or ego needs.
Seek and use advisors. Succession planning is very personal and can be an
emotional process. It's not unlike giving your daughter away in marriage, or to
some, putting a child up for adoption. This is a once in a lifetime action.
You need every advantage you can garner.
Determine the value of your company. In order to accomplish this you need
to know the difference between the various types of buyers active in today's marketplace.
To some your company may appear worthless, to others it may be worth millions!
Before you act, you must prepare and have a plan. Ideally you will :
understand what your business requires of its succession management
will know what your business is worth and that the timing is right
will have identified the attributes of your ideal successor
Ultimately, one of two options exist for every business owner. Either,
(a) the succession of your business will be an event controlled and
planned by you or,
(b) it will be an unplanned occurrence brought on by outside forces.
Others point out more harshly that eventually;
either a succession plan is implemented
or the business closes down.
For the good of your business, your employees, customers, vendors and family -- decide.
Decide to begin planning your succession now.
This eight part Package
of Information has
been designed with you in mind.
Order yours today and begin preparing to
Leave Your Business In Style With a Pile
Mr. Burbank is President of Lighthouse Financial, LLC and
since 1979 he and his associates have consulted with and provided
valuation, marketing and sales assistance to more than 2,000 family and private
business owners. He is the
author of "In & Out of Business . . . Happily" - "How to
Find, evaluate, Price and Buy Your Ideal Business and Pay a Fair Price" - "VALUware
7.0" Business Valuation
Software - "Buy a Business 4.0" Business Acquisition Software -
"DealMaker docs" Transaction Documentation Software all published by
Parker-Nelson Publishing. In
addition he is a contributing author to "Merger and Acquisition Handbook
for Small and Mid-Size Businesses" and "Business Valuation
Handbook" both published by John Wiley and Sons
and has written many articles on business sales and valuations. He
has conducted seminars and addressed many trade associations in the US, Canada
and abroad. Ted is available for private consultation, valuation and
acquisition assignments. He may be
reached by telephone: 508 794-1200 or by email: firstname.lastname@example.org