One of the main questions I ask business owners is, “Do you have a succession plan or exit strategy for your business?” I also ask employees: “Do you know if there is a succession plan or an exit strategy in your company or organization?” It may surprise you to learn that, in my experience, more than 90% tell me that they do not have a succession plan or exit strategy. A 2004 CIBC Small Business Outlook Survey (conducted by Decima Research) indicated that 39% of small business owners plan to sell their business and 15% plan to have a family member take over. However, two-thirds (67% (of the entrepreneurs surveyed said they had not yet addressed the issue of who would take over the company. For me, that result is very revealing and, frankly, it is a motivator for writing this article) .

Succession planning is a critical factor for the long-term success of any business. Leadership transitions in business affect the continuity of the entire organization, employee retention, customer retention, and return on investment. Creating and implementing a process that creates visibility, accountability and greater integration of all facets of the business is essential.

In another article, Your Strategic Thinking Business Coach provided seven (7) strategic actions that must be taken to strategically structure a succession planning process. Those seven (7) strategic actions are:

Strategic action n. # 1: Begin the succession planning process early.

Strategic action n. # 2: Determine and clearly communicate the purpose, goals, and scope of the leadership succession plan or program.

Strategic Action # 3: Clearly define the desired and required qualities of the new leader.

Strategic action n. # 4: Develop a clearly focused leadership development strategy.

Strategic action n. 5: Develop a talent management process that will incorporate strategic thinking for specific development opportunities for future leaders.

Strategic action n. # 6: Identify future leadership candidates by developing a system to assess current and future leadership needs.

Strategic Action # 7: Identify a system for communicating information to ensure that succession and / or leadership development programs are in line with the strategic needs of the business.

After developing the strategic action list, it was important to develop a general outline to present the strategically structured succession planning elements. That scheme is the following:

STRATEGICALLY STRUCTURED SUCCESSION PLAN OUTLINE

I. GOALS AND OBJECTIVES

Develop a vision statement for your business

Develop a mission statement for your business

Develop a list of your core values ​​and guiding principles

Develop short-term and long-term goals for your business

Identify your business stakeholders

Develop your personal vision

Develop your personal goals

Develop your retirement goals

Build a team of advisors for your succession planning effort

Establish the need for a succession plan.

II. ESCAPE STRATEGY

Develop options for your exit from your business

Review the options developed for your exit from business.

Select your option for your exit strategy

III. BUSINESS VALUATION

Get professional advice to determine the value of your business.

Determine the value of your business

Determine the present value of your business assets and liabilities

Determine the goodwill value of your business

IV. BUSINESS STRUCTURE

Identify and quantify your company’s debt

Recruit and retain productive employees

Business structure to maximize value

Document the key processes and procedures used in your business

V. TAX CONSIDERATIONS

Develop financial goals

Identify the tax implications of your current business

Plan and implement a tax strategy to minimize your taxes

SAW. LEGAL CONSIDERATIONS

Hire professional legal advice

Develop a buy-sell agreement for your business

VII. REAL ESTATE PLANS

Hire a professional estate planning advisor

Develop an estate plan

VIII. SELECTION OF SUCCESSOR

Develop specific criteria for your successor

Recruit and select successor based on your criteria

Communicate the successor selection to your stakeholders

IX. SUCCESSOR TRAINING

Develop a list of characteristics and skills necessary for your successor.

Develop a training plan for your successor

Develop a coaching / mentoring plan for your successor

Set a timeline for your successor plan

X. CONTINGENCY PLAN

Develop a contingency plan (based on the “What if?”)

Investigate and identify insurance needs (disability, personal life, critical illness, business, key person, etc.)

Select and train a key employee to take over in the event of an emergency or unforeseen event

Communicate your plan to stakeholders and advisers

XI. IMPLEMENTATION PLAN

Document the roles, responsibilities, and expectations regarding the ownership transition.

Identify a facilitator to ensure that the succession process takes place.

XII. DEADLINES

Identify your timeline for the management transition

Identify your timeline for your business ownership transition

Identify your timeline for your complete exit from your business

XIII. COMMUNICATION

Document the succession plan

Document how to proceed with the succession plan in case of unforeseen events (accident, illness, death)

Document transition or exit strategy to inform family, employees, customers, vendors, community, and all stakeholders