Succession planning is a process of exploring and choosing a future ownership structure and new leaders for your business. In privately held companies, this process usually involves a single owner or a small group of owners working with their trusted advisors (both professionals and loved ones) to understand the options and make a plan.
There’s no such thing as too early, when it comes to succession planning, but if you wait too long, it can be too late. Many business owners do not plan for succession because they are busy with the day-to-day demands of running the company. This can lead to rushed decisions when opportunities arise or even to closing the business when the owner retires.
You have worked too hard to leave your company’s future to chance. Here are three succession planning tips:
- Give yourself lots of time. Selling a business is not easy and it can take years to find the right buyer. Leave plenty of time for learning, conversation, and exploring opportunities. It can be helpful to start 5-10 years before you plan to exit.
- Consider all the options for both internal and external buyers. Internal buyers can be key employees, a team of managers, or the employees as a whole. Learn about employee ownership. Potential external buyers could be local individuals, the companies you compete with, or private equity firms.
- Seek advice. Engage as many trusted advisors as you can in your succession planning process. This might include your CPA, lawyer, business partner, spouse, or trusted employees. You might also consider a certified exit planner, wealth advisor, small business development center advisor, or employee ownership consultant.