Advisely BoardAMA: I'm Darren Smith and I've just implemented a business succession plan, Ask Me Anything!
Advisely ContributorDarren.Smith given your recent experience in successfully selling your award-winning practice, what are the key factors you believe are essential in preparing a business for a smooth and profitable succession? Additionally, what common pitfalls should be avoided during this transition period?
- Darren.Smith
Certainly! Succession planning is crucial for ensuring a smooth transition in business ownership whether than be internally or externally through a trade sale.
Some key factors to consider when preparing for a profitable succession:
3 major considerations normally – Time / People /Finances
- Begin succession planning well in advance. Don’t wait until the last minute.
- Understand and document what the business is looking to achieve and also how this interacts with what the business owners' goals are.
- Build strong foundations in your business and always look for improvement
You want to make your business as attractive as you can to any potential purchaser. That doesn’t mean being ready to sell straight away, but you are constantly refining your offering, your operational processes and your client engagement to put you in the strongest position possible. You are also setting the business up to run well even when you are not there. Having the right team in place with aligned values is a core pillar.
4. Engage senior leaders in the process.
5 .Assess Current Talent: Identify potential successors within your organization. Assess their readiness and potential for leadership roles
6 Assess other Options and have a plan A, B and sometimes c
8 Consider Emotional Impact: Succession can be emotionally charged. Acknowledge feelings and provide support to those affected
Common Pitfalls to Avoid:
- Lack of preparation and not allowing enough time
- Poor communication
- Neglecting Succession Planning: Don’t postpone discussions about roles and successors. Waiting until a significant event can lead to confusion and conflict
- Keeping Succession Plans Secret: Transparency is crucial for a smooth transition.
- Trying to do it yourself when you don’t have experience …Not involving trusted professionals like advisers, lawyers, accountants or coaches
- Losing sight of impact on clients and the team
- Unrealistic expectations or having a 5 year plan that is always 5 years off…
- Cultural misalignment
