It is never too early to start making plans for the future. Succession Planning is a key
process that any business owner must consider to ensure a smooth transition when key leadership positions become available. This is particularly true with small business owners who plan to exit their business at some point in the near future.
The Canadian Federation of Independent Business conducted a Succession Planning Survey in 2011 and had over 3,389 responses. When respondents were asked about how they would like to exit their business, the top responses were as follows:
- Sell to buyer(s) unrelated to my family – 45.1%
- Sell to family member(s) – 19.2%
- Transfer to family member(s) (e.g. inheritance) – 21.2%
- Wind down (close) the business – 6.0%
- Other – 4.3%
The results of the survey demonstrate that in most cases, small business owners are considering the option to sell to someone unrelated to their family. In order to do this properly it is crucial to develop a plan and start to add value to your business. Succession planning should start 5 – 10 years before you plan to sell the business.
Five quick tips for succession planning:
- Recognize and identify any potential in your business – The potential within your business can be recognized through your employees. When you provide skills development and a creative atmosphere then you are able to see the talent that is available for you to utilize and help grown your business.
- Know exactly where your business stands financially – It is important for you to work closely with an accountant so that you will know exactly what you owe and where you need to change your spending habits.
- Surround yourself with professionals who can walk you through tough decisions – Finding mentors and advisors who can help you to make the right decisions. They are people who will tell you the truth. They will listen to you and are qualified. They have specific skills in areas that can help you go grow your business.
- Continue to grow your abilities as a business owner – Education is an important aspect to your business and as a business owner you should continue to take courses and advance your skills and abilities.
- Always evaluate yourself, and the business based on current trends and the economy – You should stop working in your business and work on your business. This means that you need to be aware of your own skills and what is going on around you in the economy and outside of your business. It does have a big impact on how you conduct business.
As a business owner you work way too hard! It is important that you take the right steps which include making decisions from a personal and business standpoint. Succession planning can help you to protect the legacy of your business!
At Halton Region’s Small Business Centre, we are here to help you with all your business questions. One of the goals of the Centre is to empower small and medium-sized enterprises and give you the tools to achieve success. For more information about any of Halton Region’s Small Business Centre resources and services, and how we can help direct you to the right resources, contact us at 1-866-4HALTON (42-5866), www.haltonsmallbusiness.ca, firstname.lastname@example.org or visit us at 1151 Bronte Road, Oakville. Don’t forget to follow us on Twitter @haltonecdev and Facebook at www.facebook.com/HaltonSBEC.