By Mikayla Wahl, Communications Intern, UNI Business and Community Services
Working to grow and maintain a business is undeniably challenging. Juggling customer and employee needs, dealing with business operations, and remaining profitable are enough to keep any small business owner on their toes. But what happens after you put in the work to make your business a success? What happens when you are ready to retire or move on? Who takes over if something happens to you or your partners? Have you conveyed your long-term wishes and goals for the business?
These are important questions for every business owner to answer. But for many entrepreneurs, it’s the last thing on their mind. Here are five reasons every business owner should have a succession plan detailing what happens to their business once they are no longer in control.
1. A succession plan can help your business avoid future conflict.
Conflict, especially conflict revolving around decision making and leadership, can be a huge setback for businesses. Setting up a plan that details how future business decisions are made will help successors avoid conflict when you are no longer calling the shots. Establishing this plan early in the game creates a longstanding pattern of healthy, cooperative decision making that is likely to last, even as the business changes hands. Having that plan in place from the beginning is one of the best ways to set your business up for sustained success.
2. Picking a successor early allows you to train them.
Choosing a successor seems like a daunting task, but it doesn’t have to be that way! Planning your successor(s) from the get-go allows you to teach them all the skills they’ll need to take on the job. This allows you to pick someone with potential, even if they don’t yet have all the qualifications they need. Plus, being the one to train them gives you the peace of mind that comes with knowing you’ve left your business in the right hands.
3. A succession plan can help you transition out of full control of your business.
Having a succession plan doesn’t mean handing your business over all at once. Instead, you can create a plan for retirement that allows you to slowly relinquish control to your chosen successors. Creating a timeline for your retirement will allow you to collaborate with your successors and is ideal for both you and your business. Planning early can help you create a strategy that works best for you, and can help you ensure the future success of your business.
4. Selling isn’t always a viable option.
Some people plan on selling their business in lieu of a succession plan when it comes to in retirement or moving on. However, this may not always be a realistic option. Finding a buyer willing to work in your timeframe and buy at your cost can be difficult. Finding a buyer that values your business as much as you do is even less likely. Having a succession plan is not only the best case scenario for your business but it can save you from the headache of trying to find the right buyer.
5. Having a succession plan can save your business.
Many people think of a succession plan in terms of retirement or moving on. However, should other circumstances occur that take you away from your business unexpectedly, this forethought and careful planning might be the only thing that keeps your business afloat. The earlier you set up your plan, the more prepared everyone will be for the unexpected.
For more information, state of Iowa requirements and past webinars about succession, visit Exit Strategies on the IASourceLink website or contact the Iowa Business Concierge at 866-537-6052.