In the words of Michael Jordan, “I’ve never lost a game. I just ran out of time.”
Business succession planning is a process that all business owners must undertake to ensure a smooth transition of ownership, and management, when they retire or become unable to continue in the business. Unfortunately, many avoid succession planning or cannot prioritize it because their business is running them.
Here are some reasons why starting succession planning early is critical:
Time is Your Ally
Succession planning involves identifying and grooming the right successor, developing a strong and sustainable business, and preparing for contingencies such as unexpected events or crises. All these elements take time to implement and refine. By starting early, business owners have the luxury of time to make informed decisions, test strategies, and adjust course as needed. They also have more options for potential successors to enable investment in their training and development, or more options for alignment of the business itself for the right segment of buyers.
Uncertainty is Inevitable
Life is unpredictable, and unexpected events can happen at any time. Business owners who delay succession planning risk leaving their business and legacy to chance. Without a plan in place, the business may face legal, financial, and operational challenges that can erode its value and reputation. By starting early, business owners can prepare for various scenarios and create a roadmap that addresses potential risks and contingencies.
Succession is a Process, Not an Event
Succession planning is not a one-time event that happens when the business owner decides to retire or sell the business. It is a continuous process that involves ongoing evaluation, adjustment, and communication. By starting early, business owners can build a culture of succession that permeates the organization and ensures a smooth transition of leadership and ownership.
Succession Planning is Just Plain Good for Business
Succession planning is not just about preparing for retirement; it is also about building a stronger and more resilient business that can adapt to changing market conditions and opportunities. By starting early, business owners can develop a strategic plan that aligns with their goals and values, invest in infrastructure and technology, and build a team of talented employees who share their vision. They can also create a culture of innovation and continuous improvement that fosters growth and profitability.
In conclusion, Jordan’s sentiment holds true for business succession planning as well. Uncertainty virtually guarantees the end date and outcome will be less flexible and predictable than when one proactively chooses to start. Succession planning is a strategic imperative that helps ensure sustainability, longevity, and legacy.
It can be too late to start that planning, but never too early. Don’t run out of time!
Schedule a private call with Doug
Douglas Cook is a Certified Exit Planning Advisor (CEPA) and is the Senior Value Advisor at Headwaters Strategic Succession Consulting, LLC. He specializes in helping business owners formulate exit strategies while helping to increase the transferrable value of their companies.
