Succession Planning: A Small Business Crisis?
A friend just passed on a good article about succession planning in the current issue of MyBusiness magazine.
A sidebar in the print edition notes five key questions to consider long before you’re ready to retire.
- Are you trying to raise as much money as you can for your own retirement?
- Can you imagine life without thinking about the business?
- Are your heirs interested?
- Do you want to maximize the wealth you leave for your family?
- Is the value of your business increasing or decreasing?
A business owner’s answers to these questions are critical to finding the right succession or exit strategy for them.
Most owners underestimate the time required to carry out a viable exit plan. Sure, some “win the lottery” through a quick strategic sale for top dollar, but those cases are rare. The article notes that crafting a viable exit plan can take as long as seven or eight years.
I’m reminded of the poll conducted last year by George S. May International. The poll found that 58% of business owners have not recently valued their business and do not plan to do so in the future, while 42% of the respondents plan to sell their business within 10 years.
Peter Drucker said, “What gets measured gets managed.” If that’s true, 58% of business owners aren’t managing what is presumably their largest asset. That has significant implications not just for their net worth, but also for their heirs and their communities.
Tags: Succession Planning
