writes managing director of Cartmell Shepherd, Peter Stafford.
It is probably the one thing you continue to put at the bottom of your increasingly big to-do list. In fact you may not even be entirely sure what one is.
Setting aside a little time to get things sorted in this area is as important as securing the financial future of your business. In many ways, the two go hand in hand.
We’re talking succession plans, and the importance of first and foremost having one, and then making sure it works.
Don’t know what they are? Well it’s simple. Let me explain.
Every business has a constitution; a set of rules which is either implied or, in some cases, written as part of a partnership or a shareholders’ agreement. If it’s not written then the law will imply one – whether you like it or not.
It is a way of ensuring there is structure to the here and now – of ensuring every cog in your business machine works in tandem.
What many businesses don’t have is a plan for the future; a blueprint that deals with some of the issues the owners may rather skirt around, but that in reality need to be tackled head on. They will happen one day.
The ‘what ifs’ at some point in the future will become ‘what nows’ and they really need to be discussed before what now becomes a reality.
What if a family business owner chooses to retire? Who will take over and how will business shares be split? Do you want to keep some control?
What if a business owner has three children, but only one holds an interest in running the company?
What if the business is affected by the death or serious illness of the owner or sole director – and that individual happens to be the only one who has the details of customers, key suppliers, bank accounts and so on.
The unexpected can and does happen – and it can be nothing short of disastrous for a business if a succession plan does not exist. We’re talking businesses of all shapes and sizes here, from one person outfits to much larger companies.
Succession planning is vitally important, and it does not have to be a scary process.
No problem is insurmountable and there are always a number of ways in which an issue which seems impossible to deal with can be resolved.
As sure as the seasons change, we all get older. No-one can go on forever, so I urge you to ask yourself this question: Do I have a plan for the future which means that my business will continue to grow and thrive when I am no longer a part of it?
If you don’t, here are some really simple tips:
- Consider what the future looks like when you are no longer an operational part of your business?
- Think about what challenges there may be with regard to succession planning and start to think about how you might solve them.
- Be realistic and brutally honest about what needs to happen to start making your plan a reality.
- Seek legal guidance to make sure you get it right. A few hundred pounds now may save many thousands in the future, and provide you with solutions you may not even have thought of or considered possible.