If you’re a business owner, you probably have a pretty good idea about what your long-term business plans look like, including your exit strategy. But the statistics say that almost 78% of businesses have no transition team, and 83% have no written transition plan. This is especially troubling considering 70% of business owners are more stressed and have less time to plan than they did a year ago. So, why are we telling you all this? From business broker to business owner, you need to know it’s time to start planning. If you don’t have a succession plan in place, now is the time! A succession plan is more than just an exit strategy. It’s not just about the standard operations of business; a succession plan is about developing a strategy for uncertainties and considering the what ifs. If you are having trouble getting started, contacting us(link) is a good way to start.

Think it Through

A succession plan includes the intimate details of how to sell the business. But more than that, it contains continuity elements that help guide employees on what to do if something happens to the business owner. These details help to protect others who have ownership in the company, beneficiaries, and employees. For you, a succession plan will help you create a retirement date and make important decisions about your future income. Paying attention to these details will also benefit relationships with your customers - both current and future by ensuring their experience is never disrupted by a change in ownership or plans. At Transworld Indiana, we specialize in helping you work through these intricate details.

The more you think these contingencies through, the better off you will be. When it’s time for you to leave your business, you don’t want to have to worry about your retirement plan. When mapping out your succession plan, it’s important to include those well thought out contingencies. Here are a few scenarios you’ll want to work through:

Income Considerations: What accommodations will provide income if you leave before a succession transition is completed? Will a change in succession date due to future ownership make a big impact on your goals?
Leadership Duties: What happens should a disruption in roles occur? This could mean an important employee leaving, or simply current and existing employees stepping into leadership roles if an ownership change should occur.
Unexpected Events: Succession plans should include automated triggers which provide next steps in the event of an unexpected disturbance in the plan. Generally, these triggers provide a period of review so the elected parties can put a plan in place. Sometimes, these events lead to a different succession plan.

Address Continuity

Continuity discussions are important. This is where you cover all the what if scenarios you played out before. Ultimately, the goal is for your retirement plans to not be disrupted - but the reality is it’s highly possible that any one of these scenarios may occur, and that's why a well-rounded succession plan is critical to any business owner. Continuity situations to consider: divorce or death of a future or current owner, interference from a future owner, termination or departure of an essential employee, income provisions for current owners in situations like illness or accident, personal bankruptcy of either party, income provisions for the family, and more. Have questions about continuity? We’re here to help!

Have a Plan

A succession plan doesn’t just benefit your business and employees. A succession plan is ultimately your plan for retirement and your future income. By this point in your succession planning, you will have worked through many different scenarios and have identified how you want to build your succession plan. After you have your contingencies mapped out, it’s time to get back to the basics. Covering the basics last might seem counterintuitive, but it’s necessary to examine the what if scenarios that you might come across. To wrap up, here are 6 basic pieces of any succession plan to consider when crafting yours:

Timing: when is the best time for me to exit?
Successor: who should the new owners be?
Partners: who should I consider bringing in during this transition?
Personnel: which employees could be leaders?
Price: how much is my business worth?
Exit Strategy: what is my overall plan for leaving the business?

Are you preparing your succession plan? If not, it’s time. Contact Mike to start planning.