THERE’S AN ELEPHANT IN THE ROOM THAT NO-ONE’S TALKING ABOUT!
The average man now lives until age 78 and women live an average 83 years*. About half of all Australians aged over 30 can, at some time, expect to get sick or injured to the point that they can no longer run their businesses.
Planning for the future is put in the too-hard basket by many business owners caught up in the day-to-day running of the business. What little time they do have to work on the business (rather than in it) is spent drumming up ways to generate higher profits, manage cash flow and reach new customers.
It is important to look ahead, think and plan about the future. So crucial is succession planning to the future that highly successful entrepreneurs start working on a succession plan the first day of business (if not earlier). Whether you’ve brought a business or started one from scratch, what you plan to do with the business and when should be thought about and documented.
Do you want to sell the business, or is it your retirement fund? Do you want to hand it down as a family business? As a business owner don’t you owe yourself, your dream and the people associated with your business the respect to have a plan in place that tells staff, family members or partners what to do if you can no longer come to work due to death, accident or illness.
Every activity undertaken in your business should be clearly documented so anyone reading it knows exactly what they should be doing to ensure the business carries on as usual. This means customers can expect the same impressive experience they’re used to, profits aren’t likely to dip, and anyone associated with the business can carry on as normal with the same level of trust they have always had.
“94%of small business owners don’t have a documented succession plan at all.“
Source: Cameron Research Group, The Australian Small Business Market for Financial Services: 2006.
If you make the effort now you will become part of a such small minority of business owners that you cannot imagine the competitive advantage at sale or handover time. When my husband and I sold our business earlier this year our ability to attract a quality well priced offer in under three weeks had a lot to do with the fact that we had systemised the business so that anyone could sit in the ‘chair’.
Succession plans are also vital if you plan to rely on the ongoing income from the business to fund your retirement. A solid plan means very proficient management of the business going forward and you can rest assured that any family members who rely on income generated by the business will be well looked after.
A good succession plan will minimise the disruption to the business while a new leader takes over, regardless of the circumstances. It will also drastically reduce the stress on family members and staff – your position is filled in an orderly, efficient manner with no surprises. A drama-free succession which ensures there is little impact on operations or profits will also serve to maximise the value of the business – creditors in particular like to know their investment is well managed.
Whether you plan to sell all or part of your business or hand it on, a succession plan enables you to work towards implementing and refining systems and processes to the point that the business can run just as well without you as it did with you.
*Australian Institute of Health and Welfare