Why Succession Planning Is Necessary for Your Business

by | Jun 25, 2021

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Why Succession Planning Is Necessary for Your Business

by | Jun 25, 2021

100% of Business Owners Are Going to Exit Their Business

If you are a business owner, you will eventually transition from your business. Why not plan ahead to create options, when time is on your side, to develop a strategic exit plan for your business?

Entrepreneurs don’t start and build their companies on their own. Neither should they plan their business transition or exit strategy without trusted succession planning experts in their corner.

Your Business Will Be Worthless If It Is Not Transferable

For a business to live on, it needs to be able to survive without its owner. If your business cannot transfer operations, sales, and customer relationships, to someone else, your company will lose much of its value. Why settle for just an asset sale when you have worked so hard on your business?

It is crucial to develop a holistic exit plan to ensure that your business is transferable. A strategic exit plan includes contingency planning, value creation planning, financial planning, and human capital planning. With the help of value creation and succession planning advisors, you can identify blind spots and solutions to reduce financial and operational risks associated with the company being too dependent on its owner, and also grow enterprise value.

Succession Planning Is Business Strategy Planning

Exit and succession planning is critical for the future of your business. Why leave your future to chance? As you consider your 3, 5, or 10 year business goals, think about succession planning as well. Do you intend to:

  • Sell to a third party?
  • Transition to family or next generation of managers?
  • Create an ESOP (Employee Stock Ownership Plan)? 

With the help of business transition advisors, you can weigh the pros and cons of each option and best ways to position your company with those goals in mind.

75% of Business Owners Have Regrets After the Sale

According to the Exit Planning Institute, 75% of business owners have regrets one year after selling or exiting their company. Some feel pushed out of their business. Others are dissatisfied with the net proceeds from selling their company.

To increase the likelihood of a successful exit, it’s important to consider your business, personal, and financial goals. Reflect on your goals by taking this personal readiness questionnaire.

These thought provoking questions can help you prepare for a more lucrative exit with no regrets.

Get Rewarded for Your Hard Work

What’s the number one thing standing in the way of your exit? For many business owners, it’s the need to improve the business.

According to the Value Builder System, companies implementing value creation and risk reduction strategies around eight key drivers can increase enterprise value by 100% or more.

It’s possible to look at your business through the lens of a potential acquirer. Assess which areas of your business set you apart from the competition, and which might cause you to leave money on the table.

Preparing your company for a leadership transition makes economic sense. Enabling your company to thrive without you not only increases business value, but allows you to gain more freedom over your time and happiness in your personal life.

Take The Next Step

The best time to begin exit value planning is now.

As an Exit Value Planner and M&A Advisor, I work with business owners of small to mid-size companies to guide you through your next steps.

To provide additional value, I collaborate with a team of financial and legal experts with extensive experience in business acquisition and succession planning. The Business Advisory Group consists of a Certified Exit Planning Advisor (CEPA), an M&A/business and tax lawyer, and me, a “business transition sherpa” strategic growth and M&A advisor. Together our objective is for you to have a lucrative and successful succession.

We can help you:

  1. Estimate your financial needs after you leave the business.
  2. Estimate the value of your company today.
  3. Estimate the potential net proceeds of a transaction.

The sooner you understand these numbers, the more time you’ll have to close the gap, if there is one.

Take the next step by requesting an initial meeting to begin planning for your business transition and strategic exit today.

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