Ready to Start Working on Your Succession Plan?

Written by Rick Bellows

December 21, 2022

succession plan

It has been said that the day you start your business is also the day you should develop a plan to exit the business. But let’s be honest with ourselves for a minute: most business owners don’t do this, or we think about it way too late in the game. Many of us tend to “find” ourselves in the businesses that we are in, not always knowing exactly how we got here, let alone how we are going to exit.

Do you plan to create a seamless transition to a family member or key employee? Perhaps you are looking to the outside market for a strategic buyer? Whatever route you take, the question is always, “Are you ready to get maximum value for a business you have spent years building through blood, sweat, tears and major financial investments?”

I know it is hard to think about getting out of your business while you are still building or growing your business. But the reason most of us start businesses (in addition to serving the communities we are located in) is to create real value and wealth for ourselves and our families.

Don’t sell yourself short. As you create and reevaluate your business strategy for your company every year, you need to incorporate into that strategy a succession or exit plan. This should cover your plans to retire, who your successor is, or the steps you’ll take to find a buyer on the open market. And, much like your business strategy, this is a very fluid plan and should be subject to change as you and your business evolve. This is a business plan that looks at everything that’s happening over the next five to 30 years, depending on where you are in life.

Your business plan should be a constantly changing document that can be updated over time. Don’t get locked into what you put on paper. Conditions and people change; perhaps after 10 years, you have built a business that has value, and maybe the next generation is ready now. Your business plan should be flexible enough to allow you to take advantage of another opportunity or just give you more time to spend with the grandkids.

So, what should your next steps be?

    • Start preparing now, before you want to sell. To get maximum value, you must show steady growth year-over-year. Processes and systems must be in place. A potential buyer will be looking at trends. Can they come in and from day one continue to make money? Your people — your biggest asset — must all be on the same page, matched with solid processes.
    • Document all your policies and procedures. Build strong teams, and make sure the business is built to run without you. Define your core values and make sure every employee is on board.
    • Define what the real value of your company is. Steady growth? Consistent profits? People? Processes? Systems? What are your unique differentiators in your market? Are they clearly defined, and just as importantly, well-articulated and known by your community?
    • Have you identified who will take over? Are they ready? If not, what skills and/or training do they need to be ready?
    • Identify your transition team. Get your team involved: CPA, attorney, financial planner, insurance/tax planner. Get professional advice. You are not and should not be in this alone!
    • Figure out your worth. What is your business really worth? How did you establish that value? Can you clearly show the math on how you got to the number? Would a reasonable buyer agree?

By clearly defining your succession plan you will not only be building a better company that’s ready for transition, but you will be building a more profitable company now!

Your Nationwide team is here to help. The first step is to get that business plan written. We have a complete “How To Write a Business Plan” workbook that will take you through the steps and provide the templates to make this as easy as possible. Please reach out to me at rick.bellows@nationwidegroup.org to request your workbook. You aren’t in this alone – we are here to help!

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