Is Your Plan In Place?

As you may know, only 10% of business owners have a written succession plan and…every business owner will leave their business one day. No. Matter. What! In the best situation, you leave when you want, with the return on investment you hoped for, and with a trusted successor or buyer in place. In any case, you still need a successor, and most of the time, they will not just appear in your life, with the skills and experience you need, and be willing to buy your business for what you think your business is worth, or take over and run your business for the compensation you have in mind. Drafting a succession plan and creating an exit strategy is complicated! It’s tricky. It’s filled with uncertainty. It can be uncomfortable to think about leaving your baby to someone else, even if they pay you handsomely for it. You may be uncertain about their real ability to run and grow your business. You may be worried about what you will do when you no longer have the business to run. It’s been such a big part of your life for 20, 30 maybe even 40+ years. If any of this resonates with you, know you are not alone. We interviewed over 35 business owners and have collated their most pressing concerns. See the list. Post your favorites below.

Take the first step today by recognizing that it’s time to get started. With a written succession plan in place, you not only prepare for the worst case scenario, you have time to CREATE a best case scenario.

Strategies for Planning Your Legacy

Many business owners think about what will be their legacy and what will they leave behind. Less than 1/3 of family businesses survive into 2nd generation and only 13% into 3rd according to Family Business Succession – The Final Test of Greatness by Craig Aronoff, Stephen McClure and John Ward:

Most leaders who start a business have a passion for the business. They are on a mission to make a difference. As each succeeding generation grows into leadership positions, that initial mission can get lost or lose importance. The strategies may need to change as generations evolve and our world becomes more complex, but the core values that you founded your business on still matter.

Here are some strategies to ensure your legacy:

1. Document the principles and values you founded the business on. Have you learned any important lessons that would be helpful? Any leadership or business tips, advice? Write it down and share it for your next generations to use as a guide.

2. Educate your next generation and beyond about investing, budgeting, and getting credit. Train them on how to finance a business, manage cash flow, and make good business decisions. Show them how and more importantly, why! You have been handling money for decades and it may seem like common sense but it is not. If your successors do not know how to properly manage money you can kiss your legacy goodbye!

You have put a lot of time and effort into your business for decades and you deserve to keep your legacy alive. Take out your pen and paper and get to work!

The Next Generation: A Great Son Doesn't Always Make a Great Boss

Very few things in this world are as satisfying as starting a business from scratch and making it grow with hard work and dedication. There are many large companies that started out in garages, small apartments or even the corner of a busy city street. In any case, all business owners that started from the bottom will eventually face the inevitable concern of figuring out who they will pass the torch to. Company presidents who face this dilemma are usually drawn to the idea of transitioning their ownership position to one of their children. After all, these are the people they often feel that they can trust the most. They grew up with the values you taught them and they are decent human beings and great sons and daughters, but maybe they don’t really have what it takes to run the business that took you so much effort over so many years.

There is a very common problem with a strong business that is passed to the next generation of the family. It’s been said that the first generation works extremely hard and barely enjoys the perks. The second generation works just hard enough to keep things running, but they enjoy all the benefits of their successful business. The third generation has everything they ever wanted, but they didn’t put in the same effort for it.

This risk can be minimized if you expect them to learn and earn what they are going to get. Make them work hard, do not give them all the advantages and perks without making them get a taste of hard work and 12 hour days of stress and tension. If you want things to run properly when you give away the power of your company to your sons or daughters, make sure they appreciate what you are giving to them.