Start succession planning now

Over the last few years as an expert in the Employee Ownership Trust, and for two decades before that as a personal financial planner, I have discussed succession planning with hundreds of business owners. The conversation has tended to be remarkably similar.

I ask: “When do you plan to sell your business?”

They invariably reply: “I plan to sell my business in around five years’ time.”

Then, a year later, I might be talking to that same business owner. We have another conversation about succession planning. It goes like this.

I ask: “When do you plan to sell your business?”

They again reply: “I plan to sell my business in around five years’ time.”

Positive Intent

We all know the problem with business planning and strategy. You have an idea. Maybe you go to a conference and return with a pad for of notes. Perhaps it’s a coaching session. You hear something that a competitor is doing. Then the phone goes, or you check your emails. An issue demands your attention. You go back to doing the day job, and planning and strategy gets put back on the back burner.

There is a well worn expression for this: it is essential to spend time working on the business and not just in the business. And this was never more relevant than the topic of succession planning.

Moving a business towards a potential sale needs positive intent.

Incidentally, I say ‘potential’ sale because succession planning is really about creating options. It boils down to this: reducing the reliance of the business on one or a few people).

Your New Role: Succession Planning Director

I was discussing this recently with a business owner. He is the founder and Managing Director of his business. He also performs the Compliance Oversight, Financial Director and HR Director roles. He also does most of the Sales & Marketing. And he sees most of the clients.

He plans to sell the business in around five years’ time. He loves the idea of the Employee Ownership Trust as the exit route. He is, however, too busy performing the various roles listed to be able to spend any time preparing others to take those roles from him. I fully anticipate, therefore, that if we speak in twelve months, his plan will still be to sell in five years’ time.

Conscious of this, at the end of our discussion, I suggested to him that he now has only one primary role: Succession Planning Director. All the other roles remain important, but they report into this new primary role.

Over the coming months and years, he will start to appoint others to take those roles that he wishes to shed – that he needs to shed if he wants to one day exit the business. But this will only happen if the role of Succession Planning Director is allowed to take precedent.

Setting Aside Time

The other action that we recommend is to set aside specific time in the diary to work on succession planning issues. Those companies that we work with, either through our Eternal Business Programme or engaging us directly, are the ones who get in touch, and who set aside time.

It is no coincidence that that are then the owners who see genuine change in their business. They quickly realise how the employees actually can step up if they are only given the space to do so. They are the ones who feel themselves moving towards being able to sell, releasing their capital, and at the same time seeing the business continue.

Then next year, when we have the conversation about the plans for the business, they are the ones who will say “I will sell my business in THREE years time”!

 

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