Business succession and exit planning is a vital step for business owners, enabling you to manage the transition of your business to future owner and management. If done successfully, it creates a clear path that aims to help protect you, your family, your employees, and your business.
Studies show that only 18% of privately owned businesses have a written succession and exit plan. Importantly, of the 18% who have a written plan, 92% of owners are successful at exiting their businesses. Of the 82% that do not have a written plan, only 12% end up exiting their businesses with anything near the amount they had planned on, and usually end up remaining at their companies much longer than they want.
The benefits of proactive exit planning include attracting more and better buyers, realizing a higher price, paying less in taxes, and having a trouble-free ownership and management transfer. On a personal level, it clears and settles your mind, re-energizes you and gives your work greater purpose, helps you focus on “the vital few” versus the “important many”, and reduces your stress and anxiety.
How Business Succession and Exit Planning Benefits Business Owners
Exiting right and retiring well takes planning. But let’s face it, business owners rarely have the expertise to tackle this on their own. This is where Socius Business Advisors specialized knowledge and years of experience comes in.
Our goal is providing you with independent objective exit strategy advice that meets your personal needs, that maximizes your business’s value and minimizes its taxes. We collaborate with you , putting you in control of your exit strategy. We use succession and management programs to strengthen your management team and increase your company’s profits.
We provide clients with:
The answer is very simple. A Socius Business Advisors team should make you money, not cost you money. This is not to suggest that your advisor, attorney or accountant, for example, is going to pay you money or that you aren’t going to end up paying for their services. But, compared to little or no planning, a carefully planned and implemented Exit Plan can result in Increase enterprise value, and Increase marketability. It will allow you to position the company to attract more and better buyers, Increase your cash proceeds, and reduce income, gift and estate taxes as well as a reduction in the risk of non-payment from the buyer.
Succession is the transfer of management and leadership from one generation to the next generation in a company. It is not necessarily from one family member to another. Proper business continuity planning seeks to bring stability to a chaotic time for the people and things you care for most should key members of your organization become unavailable.
It is a continuous ongoing process of identifying and developing associates to prepare them for advancement through training, mentoring, and stretching their responsibilities
While Business Planning focuses on business growth, succession planning focuses on the “human” capital. Ideally, this is a continuous process of moving and developing the next generation of chosen performers from management, into ownership, and onto leadership. This requires time, training, evaluation, coaching and stretching your associates. You must prepare the business to operate successfully and profitably without the present owners.
A succession plan can help sustain income and support expenses. A succession plan can provide answers as to what you—and your staff—will need for future income, as well as what kinds of expenses you may incur once you step out of the main leadership role. Ask yourself questions about your annual income and other benefits including health and dental insurance for you and your dependents, life insurance premiums paid for by the company, your car, professional memberships, and other business-related expenses.
Succession planning gives you a big picture. Some companies mistakenly focus solely on replacing high-level executives. A good succession plan can go further, however, and force you to examine all levels of employees. The people who do the day-to-day work are the ones keeping the business going. Neglecting to add them to the succession planning mix could have dire consequences. As you develop your plan, incorporate all layers of management and their direct reports.
Succession planning strengthens departmental relationships. When regular communication occurs between departments you are more likely to experience synergy, which breeds a culture of strength. Make sure that you link your succession planning activities with human resources. After all, HR is about people. By including HR in succession planning, you can incorporate elements like the employee-evaluation process, which can help when deciding whether to fill vacancies with internal candidates.
Change—a major component of a succession plan—is exciting and can bring a company unforeseen rewards. Still, change can be a source of tremendous stress, especially when people’s livelihoods are at stake. As you put your succession plan together, consider its positive effects on the business. Planning for the future is exciting and, if done correctly, can inspire your workers to stay involved and maintain company loyalty. It’s true that a plan is often put into place to avert catastrophe, but it’s also a company’s way of embracing the future—a business strategy that is essential for survival.
There is a reality…Succession and Exit Planning is not the same type work business owners are accustom to. It’s scary. It’s different and therefore it is often put off or never addressed until it’s too late. That is where Socius Business Advisors professional come in.
Socius Business Advisors is a leadership coaching and consulting firm headquartered in the greater Chicago area, with advisors in Atlanta, Philadelphia, Denver, and Hong Kong and serving clients around the globe.
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