Making sure your business carries on, even when you're gone
Here are seven ideas owners need to know about succession planning.
Statistics show that 70 per cent of entrepreneur-owned businesses do not survive beyond the founder. Did you work this hard, for this long, to see your life's work implode when you're gone?
One of the most important features about good marketing process is its impact when it comes time for the owner to move out. Whether you plan to sell out or pass the business on, having a system installed that generates leads and converts them to loyal, profitable clients will significantly improve your business's value.
Your marketing system should include a clear statement of how you are different and better; a complete sales kit filled with persuasive reasons to do business with you; a lead-generation process that includes the Internet, advertising, public relations and referrals; and a process that effectively and efficiently converts leads to loyal customers.
Succession planning is more than just making sure your marketing machine is humming, however. Here are seven other areas you need to consider:
Retirement isn't death. Small business owners don't plan for succession because they genuinely hate the idea of not working -- no control, no work, no identity -- so only about one quarter have a plan. Not planning leaves your staff and their families incredibly vulnerable.
Retirement isn't just deciding not to go into the office anymore. It's ensuring you have enough money to retire on from the sale of your business. Will your business carry on or will you sell it? Who's going to manage the business? How will ownership be transferred?
The biggest business "killers" are taxes and family discord. So succession planning is about management, ownership and taxes. Will an owner manage the business or not? Will all owners have the same number of shares? How will you reorganize the company to reduce your taxes?
Outsource. If you've been successful, you already depend on a network of people to manage your financial, tax, and legal affairs; maybe even marketing, distribution and human resources issues. Small business owners are typically too emotionally involved to make good succession plans, so let someone else you trust do it for you.
Train and mentor your successor(s). Okay, we know you hate this one -- who has the time? But how can you expect your business to continue to thrive without you if you don't train those who will take it over? And remember, you'll be throwing away your life's work if you don't.
Start business succession planning early. We know you hate this idea, too. But five years in advance is good. Ten years in advance is better. Many business advisers tell budding entrepreneurs to build an exit strategy right into their initial business plan.
Read. You owe it to yourself, your family, your employees and your suppliers to know the issues that will affect them once you've left.
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