Succession planning for your small business

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Succession planning is an important process for every business, even small businesses. Having a proper succession plan in place will secure your business legacy, provide retirement security, and make it easier for your successors to make a success of your business.

Preparing your business for your successors requires you to think strategically and this may overwhelm some business owners. Many business owners are reluctant to think about the future “after their business,” but it is crucial to be prepared to ensure the best outcomes.

Dividing the process up into three logical stages will ensure that you take care of every aspect required to plan your business’ future, and this strategic approach will help you achieve better results.

The stages of succession planning that we recommend are:

  1. Have a clear exit strategy in place

Selling a business can be a stressful and emotional process, and those emotions could easily cloud your judgement and decisions. Being patient and planning ahead will help to relieve stress and anxiety.

Preparing your business for sale requires extensive preparation and it is important that it is done in advance. Procrastinating on planning your exit strategy can lead to a more stressful exit, a lower selling price and a more complicated handover. Your exit strategy and succession plan could take a few years if done correctly, and it should be your top priority as soon as you decide to sell your business. Contracting the help of professionals may relieve some of the anxiety as they can guide you through the process.

  1. Prepare your business for sale

Once you have your exit strategy in place, it is time to get your business ready for sale. When putting your business on the market, it needs to be at its best. Take care of all those things that you have been postponing – make sure that the staff is properly trained, that your business systems are modernised, etc. Some must-dos include:

  • Make sure that your company’s financial data is in order. If your accounts have been neglected, make sure that you get everything in order before putting your business on the market.
  • Increase the value of the business by determining what drives value in your company, and improving these factors. You need to get rid of or fix anything that may make a buyer hesitate to buy your company.
  • Review production lines in your business and systematise as much as you can to ensure that all processes are as efficient as possible. Also, make sure that all these processes are documented thoroughly for the new owner.
  1. Selling your business

For the sale of your business, relying on the expertise of external professionals, including brokers and lawyers, will help to ensure that your business is ready for sale, that the process proceeds on a legally correct and safe road, and that you receive your desired asking price.