Succession Planning – the "Final Test of Greatness"
The final test of greatness in a CEO is how well he chooses a successor and whether he can step aside and let his successor run the company.
– Peter Drucker
Many business owners dream of creating a business that is so successful that it stays in the family for many generations. Unfortunately, this is not often the reality. Studies show that 70% of businesses fail to survive into the second generation. It takes planning, foresight and resolve to pass the reins in a way that makes success possible for your successor.
Issues and Obstacles
The average successful small business owner faces many issues and obstacles when he or she approaches the subject of succession planning:
The greater part of their life has been devoted to building the business from the ground up. It is their “baby” and it is not easy to hand over to anyone else.
Their identity is wrapped up in the business, as is their standing in the community.
It is likely to be the largest asset in their personal financial portfolio. Few business owners have accumulated enough investment and retirement assets to fund a comfortable retirement.
Their focus has been primarily on the business for a number of years, so they often do not have interests outside of the business.
Is it any wonder that few business owners are willing to plan for their succession?
Why Should I Have a Succession Plan?
The stakes are high. Without a succession plan, most businesses will die with the owner. If it is done right, a succession plan will:
Perpetuate an organization that fosters a strong family identity;
Safeguard the values, goals, and security of the family;
Unlock some of the business wealth created by the current generation of owners;
Allow the wisdom, skills and knowledge of the current owners to be shared with their successors;
Provide a smooth transition that preserves important relationships with key employees, vendors, customers and bankers;
Pass the business control to the right team of managers and owners while maintaining family unity; and
Enhance the prospects for future growth in the company.
Implementing a succession plan can take 6 months or 6 years. It is a long term process that starts with the desire of the business owner to keep the business in the family.
We specialize in helping clients navigate through succession while preserving both the family and the business. See how our 10 Succession Strategies® can help you pass the “Final Test of Greatness”.