There are many benefits to being a small business owner such as being your own boss, leading a team and the ability to give back to your community. A well-funded retirement account, though, is not one of these many benefits. Most of us believe that, when the time is right, we will sell our business and easily transition into retirement on the earnings generated from the sale. It’s certainly an appealing scenario. To pull it off, however, takes years of preparation and careful planning. This succession planning can be broken down into three categories – people, systems and finances.
Identifying and training the right person, or team, to take over the business requires the most time and effort. The smoothest and most obvious options will be family members or long-time, current employees. Start having these conversations at least five years prior to your anticipated transition date. If you need to look outside your current organisation, it’s crucial to start looking early for several reasons.First, it may take quite a long time to find the right fit. You’re not just looking for someone capable of executing the work. You’re looking for someone to take over relationships with clients and employees that you’ve built over decades. You’re looking for someone to run an operation that most in your community will still associate with you.Once you have selected a successor, the two of you should spend several years essentially tag teaming the job together. Make it clear to both your team and your clients that this person not only has your full trust and confidence, but you’re also transferring all of your knowledge through a clearly set out and transparent transition process.
Much of this transition process will be facilitated through systems. The more your business operates based on system, as opposed to based on you, the stronger position you’ll be in to hand it over to someone else. This can prove to be tremendously difficult in small businesses founded and run by one person over several decades. When it comes time to step away, we quickly discover that processes are not documented. It’s easy to take for granted the fact that you know how to operate so much of your business without consulting guides, checklists or procedures. You built it, you ran it, you know how it works. And indeed, this may have worked for many years. However, now that someone other than you is preparing to run the business, getting those processes out of your head and onto paper is a critical task.Again, the time to do this is years before the transition. Ideally, documenting and implementing systems that explain your function in the enterprise should be done from day one. Even if you are not thinking of succession anytime soon, growing your business can prove frustratingly difficult if you’re constantly pulled back into operations because your systems are weak.
The final piece of the succession planning puzzle is financing, which will require a significant amount of outside expertise. Defining your equity, untangling your personal finances from the finances of the business, setting a price and determining a purchase structure can be daunting tasks. That’s where we come in. We understand the complexity and nuances of succession planning. We will work with you to create a customised approach, unique to your business and your goals for retirement.
While succession may be far in the future for you, the time to start building the systems to facilitate a successful handover is right now. We’d love to sit down with you to have a conversation about this process in more detail.
Get what you want out of your business
As business owners, there is an endless stream of things, people, events and information that can overwhelm even the steadiest of leaders. We win or lose big sales, team members come and go, costs change, competition arises, and bills and payroll must get paid. We get to the end of the year, we look at some numbers and evaluate what kind of year it’s been. Often, we spend so much of our time and energy battling to simply keep up, that we never ask if our business is providing us the life we want.
We should be living lives that are empowered by our businesses, not dictated by them. To do that requires setting goals and implementing well-reasoned plans to meet those goals. The goals you have for your life will drastically change how you approach operating your business. For example, you may want to buy a boat or take the month of June to travel across the country with your family. Maybe you’d like to expand into a new market and relocate your family there, or maybe you’re looking to semi-retire. While some of these goals require more revenue, others require more profit, lowering costs or restructuring liabilities. Some goals will even necessitate changes to your operating systems, your team or your marketing strategy.
Having clarity on your goals and what you want to achieve is essential to making decisions rooted in intention. Likewise, developing a relationship with someone to hold you accountable is just as important. If you’re anything like most business leaders, you’ve set goals and implemented projects half a dozen times in the past. So, why don’t things change? Most often, it’s because there were no metrics or tracking systems put in place to monitor progress. People began to revert back to old processes out of confusion or convenience and you ended the year relatively the same way you started: frustrated and exhausted.
Working with an accountant and business advisor, to set goals, establish metrics, provide real-time monitoring and accountability will provide powerful insight. We’ve helped many business owners, just like you, implement systems that increase revenue, profit and productivity. We can work with you to better structure your assets and liabilities, lower your tax obligations and plan for both the future of the business as well as your family.
We’d love to have a conversation about getting what you want out of your business. When you’re ready, so are we. Let’s create the business you want now and care it into the future.