The starting point for all succession planning is whether or not a business owner truly believes his or her service or product is worthwhile beyond his or her own tenure.
Initial considerations, then, must include the desire to continue the business, understanding that the goodwill and skill set of the owner are replicable, value exists and that someone would be interested in continuing that legacy at some investment of their own.
Passing the leadership baton may take many forms. But a capital transaction involving the sale, merger or transfer of ownership to outside interests, future employees, family members or a family trust must be planned.
Spending the time necessary to prepare for this move will position the owner to successfully accomplish a succession plan. Start by identifying the steps of preparedness:
(1) PREPARE – Owner prepares a personal financial plan identifying short- and long-term goals for a successful transition that is rewarding for all involved.
The plan must include risk management for premature disability or death. They must understand their financial needs and what they are taking out of the business versus what is left to sustain the enterprise.
(2) PLAN – Management develops a three- to five-year strategic plan aligning initiatives, goals, strategies and the company’s vision, including an analysis of strengths, weaknesses, opportunities and threats.
This is an in-depth assessment of the situation inside and outside the company, which will expose succession plan opportunities as well as weaknesses.
(3) IMPLEMENT – Optimize business tools such as customer relationship management software solutions to sustain, develop and nurture client relationships, interactions and opportunities.
CRM software makes use of a dashboard, analytics and reporting tools to provide present-day and future business owners with an all-encompassing vantage point of operations. CRM spots patterns and identifies trends so the business can run more effectively.l