The Truth about Your Succession Preparation That No One Will Tell You

The Truth about your Succession Preparation   

Abraham Lincoln once said, “Give me six hours to chop down a tree, and I will spend the first four hours sharpening the axe.” The wisdom behind those words is simple, yet profound: careful preparation is the key to competent execution.

Business succession is very much like that. To pass the baton from one generation to the next, businesses must prepare well in advance of the transition. You would have heard time and again, about the importance of a succession plan. But does your plan help if the business owner is unable to work tomorrow?

Prudent as that might seem, research indicates that only about half of the family business owners in America have a written succession plan in place. In Canada, that number drops to 17%. Latin America and China are both at about 10%. Businesses need a succession plan.

But even before efforts are put in to crafting a succession plan, thought must be given to securing the immediate day to day existence of the business in the form of a Business Continuity Plan. This operational insurance is frequently overlooked. However, chances are high that a business owner or key employee becomes incapacitated in some way that affects the operations. If this happens through sickness or even death, the business may falter and fail to even get to the point of a natural succession transition.

How will the bills be paid? How will operations continue? Who are the business' key suppliers and customers?

As the old cliché goes: if you fail to plan, then you’re planning to fail. In our experience with businesses, we see that play out over and over. Companies with owners who don’t find the time to craft a succession plan for their company’s future; and fewer still who find time to document a continuity plan for their company’s current operations.

Failure may be an option for some businesses, but not for those who choose to prepare.

If owners roll up their sleeves, communicate thoroughly, and prepare in advance, then there will be hope for securing the current and future existence of the business. Businesses interested in their long term survival need both a business continuity plan and a succession plan.

With these, they will approach the succession transition with a well-sharpened axe—ready to cut down whatever comes their way. If you need guidance in preparing your business for the short and long term, get in touch.

Succession Strength, Inc  keeps businesses in business for generations. Learn more about our Succession and Business Transition services. If you are a family business, take the survey today to assess your family business succession efforts.