Sometimes, you can become so busy running a business that you are overly focused on the “here and now.” But for long-term success, you want to keep an eye on the future as well. Here are some of the tasks you need to focus on:
- Monetize your investment in the company and create financial capital to fund pension retirement obligations.
- Diversify and build a financial foundation.
- Find the ideal successor depending on the stage of your company’s development, keeping in mind both family and outside candidates.
- Aid in the long-term selection and training process.
- Guide the pricing of the business to maximize its value.
- Develop a transfer strategy that will be most tax-efficient.
- Guide the use of self-canceling installment notes or private annuities to receive payments if you sell.
“If you don’t have a plan, get one” is the rallying cry for businesses that have left succession planning to take care of itself. If you haven’t already identified someone to take over the firm when you retire, you may need some help to investigate exit strategies to help you put a value on your business.
What do you need to do? You’ve identified the issues — here are the next steps:
- Be proactive in your succession planning — Act early; the best time to fix the roof is when it’s sunny.
- Train a larger pool of candidates — Maintain a list of high-potential employees and the positions they might fill should a vacancy occur. Focus on the skills and experiences required for senior management positions and provide employees with an educational system that can help develop leadership skills.
- Integrate training with hiring — Training a viable successor can take several years; hiring to fill gaps may be the secret to creating a more natural progression of future leaders.
- Identify multiple successors — It may help to look beyond the traditional lineup to identify more than one appropriate successor. Expand opportunities to support personnel. Are there employees with sales and marketing skills? They can help ensure continued growth, new clients and expanded revenue bases.
- Adopt a large-company mindset — Some think wrongly that succession planning is just for big companies. But it may be even more critical for smaller firms. Failing to plan may impact retirement. Look ahead to see future staffing needs.
Innovative firms understand that to drive succession planning, they have to find a way to treat clients as shared entities. Some advice is to look to clients and not employees as potential successors.
Having a succession plan is a sign of business stability and longevity to existing and potential clients, as well as to employees. Bolstering succession planning best practices may set your business apart from competitors — and ensure your firm’s future.
You need to begin loosening the reins, as difficult as that can be, to make the eventual transition easier for everyone. Letting go is never easy — discuss the transition plan with us and gradually step back. Even if succession planning is further down the road, it’s never too early to start thinking about it.
Give us a call to help guide you through the process. Or, download our succession planning services document to learn how we can help support you through this process.