We’ve all likely heard Benjamin Franklin’s famous quote “in this world, nothing is certain but death and taxes.” We find though that many Business Owners may have the financial affairs in order as far as the distribution of their wealth, but very few have a plan as to how the business is going to operate after their retirement, death, or their general exit from the daily operations of the business. In fact, 72% of Small Business Owners have no Succession Plan in place. If you’ve got your financial succession in place, have you made a plan for how that transition is actually going to happen?
Over the next few weeks we are going to explore some of the ways to begin planning for your exit, and help Business Owners avoid some of the pitfalls that we have personally experienced through Business Owners we have known and clients that we have coached over 15 years. Check back in the next few weeks, better yet, follow us on Facebook, Instagram, and LinkedIn to be the first to see the next posts.
Here are some of the things that can happen if you don’t have a clear, planned, communicated Exit Plan:
If a clear and communicated Succession Plan is not in place far before your exit as the Business Owner, either through retirement or death, the biggest thing that you have to lose is family relationships. We have seen mothers and fathers, sisters and brothers, in-laws, children, and more ripped apart because of misunderstanding. Jealousy that their parent left more to one sibling than another, a family member wanting to newly work in the business without experience, and resentment toward a new leader from the team. All these can cause an otherwise close family to break. Nothing that you would want to happen, for sure.
Is this preventable? Certainly. Clear communication, training, and a written, executable plan is essential. More essential than writing the plan, though? Getting buy-in from all the players. Making sure that they embrace the plan is the key to it working long after you’ve stepped away.
Business Owners without a clear Succession Plan face dire consequences for the long-term financial success of their business, and in turn the successor of the business. Lacking a plan is a recipe for a huge tax burden and we have seen Business Owners with tens of thousands, even millions of dollars of unnecessary expenses upon their exit from the business. None of this is a good thing for the successor.
THE BUSINESS’S FUTURE
In many businesses, especially small businesses, the value of the business is in the Business Owner. We’ve seen time and time again businesses that suffer sometimes fatal losses when the Business Owner is suddenly not the face of the business. Brad Sugars, the founder of ActionCOACH defines a business as a “profitable enterprise that works without you.” When you think of the reality of the business with open eyes, if you were gone tomorrow would the business survive? For the 72% of Small Business Owners that have no Succession Plan, all of the customers, vendors, suppliers, and employees are left with nothing.
We encourage you to join us on this 5 week journey! Find Part 2 of 5 here.
Are you one of the 72% of business owners with no succession plan? Is it time to think about the Exit Plan for your business? It’s never too late to plan, communicate, and execute your plan. We have 15+ years experience creating, planning, training and facilitating succession for businesses of many industries. Contact us today to schedule your no-cost, no-obligation consultation today.