During this week’s Proven Match blog edition, we’re going to be discussing successful successions for small businesses. Say that three times fast. All kidding aside, planning for the succession of leadership for your franchise or small business is a component that must be a part of your overall business plan. Too often, new business owners become obsessed with the finest of details when discussing operations, sales, profits, and strategies, but completely ignore the long-term planning aspect. If you don’t know where to begin, we can help. Below are some helpful pointers about creating, maintaining and executing a sound succession plan for your small business or franchise.
Knowledge is Power
The U.S. Small Business Association (SBA) has a very straightforward explanation of considerations on their website, which is well worth the read. What their take boils down to is that a plan for the succession of your business is a built-in insurance policy to guard against the unexpected. Once your business is up and running—hopefully smoothly—there are always life’s little bumps in the road that may call for a backup plan. These include missing an extended period of work for injury or illness and the unexpected financial hardship which may ensue (see 2008-2009 for reference).
While agreeing that there is no “one size fits all” business succession plan, the knowledgeable experts at the small business nonprofit SCORE have put together an easy to follow checklist. Broken down into five steps, they include:
- Choosing a successor (family, friend or sale?)
- Develop a formal training plan (and follow through!)
- Establishment of a timetable (how far off is your retirement?)
- Prepare for retirement (and succession)
- The installation of a successor (meet the new boss)
Having a succession plan for your business will go a long way towards giving you peace of mind as you run the day-to-day operations. Whatever challenges life may throw you way—from the common cold to a lengthy unplanned absence—your business must be able to keep the doors open and go on without you.
Not to be forgotten in the plans for a successful business succession include your retirement plan. Though you may already have one in the form of an IRA, investigate the portability of your nest egg of savings as you become your own boss. Inevitably, this plan will be part and parcel of your succession plan as well, and may even affect your timetable. Life insurance and personal disability are two key benefits provisions that must be added to the portfolio.
When it comes to considerations of selling your business on your timetable, a potential transfer of ownership, retirement on your terms, or financial hardship, having a plan for succession has implications far beyond just yourself. As we always counsel, it’s best to make sure that you have accurate and professional counsel to guide you through this important process. Don’t be afraid to seek the advice of a good mentor, as well. Many business owners have run the full gamut of ownership and succession long before you. And asking about their personal experiences can be an instructive exercise.
If you’re a budding entrepreneur anxious to begin your own journey as a small business or franchise owner, keep in mind that business plans should be written from A to Z, not just A to T.
As a franchisor, you’ll want to know which existing and potential franchisees best fit your business concept. Proven Match is the proven solution in determining those factors. Through our proven behavioral assessment techniques, predictive analysis becomes a predictive success for your franchise concept. If you’re ready to show your leadership by getting started, give us a call and we’ll put you on the path to a more productive year in 2017.