Your business was created as a result of a lot of hard work and collaboration, and probably even some risk-taking here and there. In fact, it takes a lot of risk-taking. And, most people consider it their biggest asset. But few plan for their exit in order to secure the value they’ve built.
The business world mirrors life itself because it’s unpredictable, and you never know exactly what’s going to happen in the future. Some of your key personnel could depart, and you might even develop health issues that limit your involvement with the business. The truth is, it’s never too early to consider succession planning so that your business will be able to continue regardless of any twists or turns which might occur in the future.
When to Start Succession Planning
As mentioned above, it’s never too early to start. However, there is an ideal time to start. We call it at the point of viability. We all, as business owners, remember what it was like in the beginning. Most of us were in one or two places. We were either drinking from a firehose with more business and challenges than we could handle, or it felt like we were trying to dig a well in the desert just looking to stay afloat.
That’s why I say make the “point of viability” your benchmark for when to start succession planning. That’s the moment you realize you aren’t worried about next month’s payroll (although as an entrepreneur you’re probably worried about next quarter’s and next year’s payroll anyway). It’s the moment you look up and realize you’re not “starting a business” you’ve gone to “running a business.” As soon as you feel that shift, make a plan for succession. The truth is, from that point on, your business has value, and some very simple planning can help ensure that value transfers properly.
Benefits of Succession Planning
The first and most important benefit of succession planning is securing value for your family. Most people never slow down to think about what happens to the business if they die or become disabled. And, I get that. No one wants to dwell on those things. So, to that I say, let’s make a plan and move on from it. A succession plan ensures your estate (usually a spouse) will immediately own a business they may know nothing about or have no interest in running. Wouldn’t it be better to know the value of that business and allow them to inherit the money instead?
The second benefit is it protects your employees. With the proper plan in place, a business can continue to thrive after a crisis or tragedy. Without a plan that business may well close its doors for good. That could be 10, 20, or more families looking for a new livelihood.
The final benefit I’ll mention is legacy. Most entrepreneurs have a tendency to think beyond themselves. We think bigger. We consider the impact we could have on the world. Your business doesn’t have to end with you. By developing a successor and creating a strong plan it can live on, and even thrive long into the future. That’s our goal at Congevity; to help businesses thrive through and beyond anything that comes their way.