How To Succession Plan For A Successful Exit
The Hidden Crisis in Business: No Succession Plan
Picture this: You’re in the hospital after an unexpected health issue. Your phone is buzzing with urgent business decisions that only you can make. Employees are unsure who’s in charge. Your biggest client needs reassurance about their upcoming project. Family is stressed about both your health and the business’s future. This is the result of no succession plan!
Global Succession Plan Challenges: UK and US Perspectives
This scenario plays out regularly across both the UK and US. From family-owned shops in Manchester to manufacturing firms in Holmes County, Ohio, business owners consistently face the same challenge – delaying getting an effective succession plan because they’re “too busy.”
Effective Succession Planning: Two Contrasting Approaches
A recent business succession plan event in Berlin, Ohio highlighted a telling contrast: one 70-year-old owner was just beginning his succession planning journey, while another was smoothly executing a succession plan he’d crafted 45 years ago. This mirrors UK research, where less than 30% of family businesses survive into the second generation, often due to inadequate succession strategies.
Key Elements of Successful Business Succession Planning
“Most people start thinking about succession planning too late,” warns Ernie Hershberger, owner of Homestead Furniture & Dutch Design. Even though he’s nine years from transition, he already has a framework in place. His approach aligns with best practices from successful business transitions.
Why Succession Matters Beyond Business Exit
A comprehensive succession strategy addresses:
- Protecting your family from chaos if something happens to you
- Ensuring your employees’ livelihoods remain secure
- Maintaining your customers’ trust and business continuity
- Preserving the value you’ve built over years
Overcoming Succession Barriers
You’re probably thinking: “I barely have time to handle today’s challenges – how can I focus on succession planning now?” But as CPA Rachelle Lewandowski points out, that’s exactly why you need to start. Whether you’re in Birmingham or Berlin, early succession planning gives you time to:
- Test different leadership scenarios
- Develop potential successors
- Structure the business to run without you
- Make adjustments as your business evolves
The Economic Impact of an Effective Succession Plan
The importance of planning for succession extends beyond individual businesses. In Holmes County alone, small businesses contribute nearly $1 billion in annual payroll. In the UK, SMEs account for 99.9% of the business population and three-fifths of employment, making having a successful plan for succession crucial for economic stability.
Creating Your Succession Planning Strategy
Start planning your succession with these steps:
- Schedule one hour this week to list all the decisions only you can make
- Identify one key process you can document or delegate
- Talk to your accountant or attorney about starting a basic succession framework
Customizing Your Plan
CPA Lewandowski emphasizes that succession planning isn’t one-size-fits-all: “It’s going to look different for every business, based on your wants, your needs and your goals.” Whether you’re running a shop in Sheffield or a factory in Ohio, your succession plan should reflect your specific circumstances.
Long-term Success Through Succession Actions
Hershberger adds wisdom from his experience: “There are so many dynamics, and if you keep track and document ideas as they come into your head for how to handle certain situations, it prepares you for changes.” This practical approach to succession can make the process less overwhelming.
Remember: The best time to start succession planning was when you founded your business. The second best time is today. Don’t let being “too busy” today put your company’s future at risk.
NOTE: Article produced with research into wider trends. Special thanks to Kevin Lynch at the Wooster Daily Record in Berlin Ohio for his article.
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