No matter your age, it’s never too early to think about retirement and succession plans.
These plans can help you determine your business’ worth, and explore your options, whether that’s passing the company to the next generation, selling it, or delegating responsibility.
Even if you won’t be leaving the business for years, having a proper plan can offer advantages today. For instance, the right plan can increase the value of a business in the eyes of investors or lenders, and suppliers and customers too. Plans can also reveal weaknesses in your operation, which you can fix in time to allow you to grow the business to its maximum worth.
When identifying or grooming candidates, don’t look for a clone of yourself, but for the mix of skills, knowledge and leadership needed to take the company to the next level.
Passing the torch to the next generation is an option, but raises many issues. Does the family member have what it takes to lead the business? How will employees, suppliers and customers react? Can you divide the value of your business fairly among several family members? One idea is to hold regular “family council” meetings, to openly discuss things like estate planning, retirement, and family participation in the business.
Ideally, when you open for business. It may not be fully formed, and you’ll certainly be updating as you go, but having a solid exit plan can be as important as your business plan.
Whether you plan to sell, transfer or wind up the business, planning helps you make smarter long-term decisions, ease management transitions, and expand your options. The goal is to help you get full value for your efforts, and ensure the ongoing viability of the business.
Visit Royal Bank for more on this topic and all aspects of running a successful business.