There’s a reason why there are countless quotes, clichés, idioms, songs, etc. about time. It’s an equalizing resource. No matter how many times you cross back and forth over the International Date Line, we all have the same 24 hours in a day. But the Rolling Stones were lying…time is not on your side when it comes to business succession planning.
By its very name, “business succession planning” implies something far down the road to a young entrepreneur or new business owner, almost giving them permission to put off thinking about such non-pressing matters. After all, it takes a lot of time and effort to get a business off the ground. More often than not, new businesses operate on a very lean workforce, putting even more strain on the precious gift of time for those involved in making that business grow.
However, if you created a business plan, then you should have given at least a little thought to business succession planning when writing the “exit strategy” portion of the business plan. Yet, it is easy to gloss over that part of a business plan, particularly for younger people who have many years to invest in their business before retirement. It’s not something that has to be done now, and we live in a time where the immediate moment is far more urgent than anything that may come up in the future. Just because your business succession plan may not need to be implemented until many years down the road, it does not mean that business succession planning is not critical to your business now.
Businesses in their early stage are usually focused (for good reason) on survival, but a keen eye on the future helps a business grow and develop on a path that fits the needs and goals of the owner. Of course, those needs, goals and direction may (and likely will) change over time, but no one ever said that a business succession plan was set in stone. Instead, it can and should be evolving in nature.
By creating a business succession plan early on in a business’s life, you, as the business owner, establish it as part of the critical foundation for the business and its success, hopefully avoiding an unnecessary scramble at the end of your career to figure out what you will do next. Reviewing a business succession plan should be as routine and fundamental as reviewing a business’s marketing strategy or a budget, and by establishing those habits early on, a business is more likely to keep its focus and successfully manage its succession plan over time.
If the long term future is not motivating enough for you to set aside valuable time and resources to a business succession plan, consider the short term future, particularly if your business plans on raising capital from outside investors. Do not forget that a clear business succession plan and exit strategy helps a young business become more attractive to investors, who pay close attention to how and when they will get their money out of the investment.
So even if the implementation of a business succession plan seems light years away, and time and resources are limited to you as a new business owner, don’t fool yourself by thinking you have all the time in the world to create a business succession plan. This is one area where the future should not be an afterthought.
If you would like more information on business succession planning or would like to discuss any of these issues with Burr & Forman’s Business Planning and Succession team members, feel free to give us a call.