A succession plan is crucial to your ability to sell your business
A succession plan will increase the confidence a potential buyer has in your business. Without a transparent succession plan a buyer may feel that there are too many unknown quantities and will look elsewhere to buy.
If you’re not sure exactly what a potential buyer will want to see in your succession plan, consider our Succession Ready workshop – to make sure your business is at the top of the buying list.
Can I see instantly that this business is going to grow and prosper?
A buyer is not looking to reinvent the wheel with your business. Your succession plan must show them immediately that your business will grow and prosper on the path it is already on.
They can then make a decision about changing the direction or focus of the business once they own it. But they want this to be a creative and positive decision, not a reaction to poor succession planning on your part.
Show that your business can run without you
One of the biggest fears a buyer or investor has about a business opportunity is whether the business can continue without the owner. A business that relies on the personality or personal connections of the owner is NOT an attractive prospect. Good succession planning will assuage any fears on this front.
Show that your business does not rely on key staff
As much as you value your staff, a new owner will not want to feel that the business relies on any key staff. This limits the potential of the business under new ownership.
More importantly, this reduces the value of your business. A well developed succession plan helps reduce the reliance on key staff during any change of ownership and helps boost the value of the business.
Your staff should be considered in your succession plan
Nothing makes staff more unhappy than bad news out of the blue. Don’t get yourself in a situation where your staff finds out about the business being for sale from someone else.
Being transparent with your staff about the selling process will increase their level of confidence and security – in the business and in you.
The reality is that there may not be guaranteed positions for your staff once the new ownership is in place. The more clarity you can give your staff, the easier this transition will be.
Don’t forget yourself in your succession planning
Taking care of your future and financial security is the third aspect of good succession planning.
If you are retiring you want to make the process as smooth and positive as possible. If you are buying a new business or changing career, you need to ensure you have sufficient funds and energy to make the transition.
Your succession plan must factor in and detail any future “earn out” payments you are entitled to.
Your personal wealth is a fundamental priority when it comes to succession planning. To secure yours, please seek advice. You can request a consultation or cover off all aspects in our Succession Ready workshop, part of the powerful Sale Ready