The True Cost of Not Having a Business Succession Plan
The new year is a time to enact change. Your resolutions are set, you’re motivated to take action, and you’re excited about the possibilities. It’s the perfect time to turn that enthusiastic attention to your business succession plan, or perhaps the lack thereof.
Without timely planning, the odds are against you.
The reality of business succession is that it takes longer than you think. Too often planning is left until “tomorrow,” which of course never comes. In reality, the pressures of everyday work eclipse the need to focus on the future. 84% of business owners are working over 40 hours per week, and 1 in every 10 feels continuously overwhelmed by their responsibilities. The longer the future is left to chance, the longer your business is exposed to risk, as only 30% of family businesses survive to the second generation of leadership.
One major factor in timing? Preparing the next generation. The Alternative Board (TAB) found that when asked who they would consider most qualified in their respective positions, 42% of family business owners say non-family employees are more qualified. If planning is left on the back burner, those set to inherit the business may not be equipped to take over. Even if they are truly ready, they may not have an opportunity to prove their abilities in the eyes of the business owners. According to TAB, although family members may have the technical skills needed to accomplish functional duties, the leadership skills needed to move into leadership positions are lacking. Planning early provides time to identify individuals who would make viable candidates as the next in line, helping shift the odds in favor of a long-lasting business.
What can you do today?
Start with letting go of unconscious planning, stop relying on luck, and get serious about developing a business succession plan. Take the time to decide on what kind of succession you will pursue, an inside or outside sale option. Remember to keep in mind the people that rely on your business, such as your family, community, clients and more. Family businesses are the backbone of the United States, responsible for 60% of total U.S. employment and generating 78% of all new jobs. We can help turn your ambition into action – let’s talk.
 Passing Your Business on to the Next Generation: Is It Best for Your Family? Business Know How, 2011. Passing the baton – encouraging successful business transfers: Evidence and key stakeholder opinion, Small Business Service – Durham University.