Succession Planning: Setting Your Business Up For Success

There’s a reason why one of the best TV shows of the last decades was called “Succession.” The idea of passing on your business’ legacy is a serious and life-changing decision. Most business owners are trying to save time, organize the chaos, and cut costs. They save any conversation about “succession” for Sunday night HBO time. But having a solid succession plan is one of the best ways to ensure the continued legacy of your business as a leader. 

Choosing who takes over the business doesn’t have to be as cutthroat as TV makes it out to be. The first step is having a plan. This will bring peace of mind to family members, business partners, and employees rather than leaving them guessing about what will happen to the business once you’ve moved on. 

The main thing to keep in mind about the succession of your business is that it is a process, not an event. Successful succession requires creating a plan and re-evaluating that plan periodically. You don’t want your succession to be a sudden decision made in crisis mode. That will result in bad decisions, oversights, and possibly legal problems. Just think about how seriously the main character in “The Godfather” or “King Lear” took his decision. 

But where to begin? 

In this blog, we will dive into what it takes to get your business set up for a successful succession, and how technology can play a key role in that process. 

Building your team 

Choose your transition team. Outside advice and multiple perspectives are vital even if you are a die-hard do-it-yourself type of leader. You can’t possibly think of every possible problem that will arise concerning succession, so having a team will help you anticipate all aspects that should be taken into consideration. 

Pro Tip: Build your team with people who share your passion and belief in the company values. If you haven’t already, write those values down. Businesses with written values have a better chance of successful succession. It sets the foundation for alignment and preserves the company’s core identity and culture. These companies are also often more communicative and transparent, which are attributes that all help in the process. 

The transition team consists of valued, long-term employees, the legal professionals you will need (accountants, financiers, lawyers, etc.), business partners, and possibly family members. Together, they should help you: 

• Make the vital decision—pass on the business or sell—if you have not already decided 
• Decide if the business will remain within the family or be passed on to a trusted successor, maintaining its legacy
• Find an opportunity to unlock financial value and explore new ventures 
• Formulate the succession plan

Once the team is in place, work with them to create a document that spells out each team member’s responsibilities and have them help you make the first critical decision: pass the business on or sell? 

Using tech to ease the hand-off 

Technology is the best kept secret for ensuring a successful sale or succession of a business. With the right tools in place, processes are scalable, and data is readily available to make the business valuable and marketable. 

Here are five ways the right tech can help with your succession plans: 

1. Efficiency: Technology streamlines and automates business processes, improving operational efficiency and reducing costs. This makes your company more attractive to potential buyers, as they seek businesses with optimized operations and higher profitability. 
2. Reliable data and analysis: Technology enhances data management and analysis capabilities, providing valuable insights into your company’s performance and potential growth areas. By leveraging technology, you can present comprehensive and accurate financial and operational data to potential successors or buyers, increasing transparency and building trust. 
3. Security: Cloud-based solutions enhance business continuity by safeguarding critical information. Cloud storage and backup solutions ensure the preservation of essential data and documents, reducing the risk of loss during leadership transitions. 
4. Continued customer satisfaction: When a leader moves on, existing customer trust will often be called into question. Technology plays a pivotal role in maintaining customer relationships and driving business growth. Online platforms, customer relationship management systems, and digital marketing tools enable you to not only maintain a positive customer experience but also expand your customer base and demonstrate a strong market presence. 
5. Knowledge transfer: With comprehensive business management solutions, important business processes and details no longer reside in someone’s head. The software acts as a central repository for critical information, documents, and processes for various areas throughout the business. This empowers successors with the right knowledge to continue the success of the business. 

Getting Your Plan in Place 

Preparing your business for succession requires careful attention to various aspects to maximize its value. Use this checklist to ensure you are considering some of the most important factors: 

• Choose a successor 
• Improve your income 
• Optimize cash flow 
• Clean up income statements 
• Increase your EBIT 
• Boost advertising 
• Expand sales teams 
• Analyze expenses for reductions 
• Improve your assets 
• Sell unproductive assets 
• Replace aging machinery 
• Perform necessary repairs and upgrades 
• Implement a robust business management system 
• Clear potential liabilities 
• Product liability claims 
• Employee lawsuits 
• IRS audits 
• Insurance disputes
• Obtain a satisfactory Phase I environmental audit 

Sometimes it’s as easy as just having a checklist and asking for help. Delegating tasks to professionals like lawyers, accountants, and transition team members can alleviate the workload and ensure a successful transition. 

Key Takeaways 

• Succession planning is a process, not an event. 
• Build a transition team consisting of valued, long-term employees, the legal professionals you will need (accountants, financiers, lawyers, etc.), any business partners, and possibly family members. 
• Write your business values down and make sure your transition team believes in them too. 
• Get the right technology in place. One that streamlines and automates business processes, improving operational efficiency and reducing costs will make your company more attractive to potential buyers or successors. 
• Delegating tasks to professionals like lawyers, accountants, and transition team members can alleviate the workload and ensure a successful transition. 
• Using the right technology in your company not only improves operational efficiency and reduces costs but also enhances data management, customer relationships, and growth potential. By embracing technology, you position your company as an attractive investment opportunity, maximizing its value and increasing the likelihood of a successful succession or sale. 

If you liked this blog about succession planning, you may like these other blogs:

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