In all successful businesses the issue of succession from the current owner to the next generation comes up, and one question that often arises is: when is the most appropriate time to begin planning for succession? The start-up phase is obviously too early, but all too often business owners wait until the last minute – when many options are closed before beginning the process.
There are generally seven stages of business succession:
Once the business has survived the start-up stage, the founder should begin giving consideration to succession, regardless of his or her age.
The founder must commit to the concept that the business has to continue in order to create opportunity for those to come. This commitment must be communicated extensively and often.
Investing time in developing your family members and other management team members and allowing them to exercise authority and control is key to a successful transition.
Having developed a successful transition plan and recruited the right people, selecting a successor or successors becomes easier. By empowering a broad range of key people, the selection process is simplified and options are enhanced.
Having come this far, it is time for the founder to announce his or her future plans. This gives key management people and family successors a clear path to the future and a definite goal.
In implementing the succession plan, the founder must be ready to step aside and allow his or her successors to take over. The founder needs to be prepared to take on new challenges in retirement knowing that his or her financial future is secure.
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.