From the Desk of:
Doug Lawrence
Director Education and Outreach
Small to medium sized organizations occupy a large percentage of the market place. Approximately 90% of the businesses globally fall into the small to medium size business.
Now here is the scary part!
Approximately 71% of the business owners are planning on exiting their business in the next ten years. The optimum word in the last sentence is “planning”.
Only 7% actually have a formal succession plan of any kind. So at 11:59am on the day that a business owner is leaving the company panic and pandemonium will set in all because they didn’t put a plan in place.
Not having the time to plan is not a viable excuse. They assumed that everything would take care of itself and they could turn the keys over to someone on our way out the door.
They assumed that someone would come knocking on our door with the idea in mind of buying the business.
They assumed that all of that would be in place and that they could use the money from the sale of the business to fund their long overdue retirement.
Something is drastically missing from this picture – a succession plan!
There are a number of barriers to the whole process. Some of the barriers to selling are:
- financing the successor,
- finding a suitable successor,
- reducing the dependency on the current owner, and
- valuing the business.
Finding a suitable successor has always been a challenge because:
- The most popular exit strategy (37%) is to sell to a third party.
- Only 26% of business owners would sell to a family member as part of their exit strategy.
- Preparing your successor takes time and a willingness to help someone learn and grow.
Two key steps need to take place when a business is changing hands.
- There must be a knowledge transfer from the current owner to the successor. Knowing where that knowledge is today is always a challenge.
- There must be some form of leadership development prior to the departure of the current owner and that development process will more than likely be on going.
The knowledge transfer and the leadership development are tasks that we can address through the mentoring process. This is ideally where an external mentor works the best to guide the transfer of knowledge. And, to do so wholeheartedly!
The external mentor can also play a huge role in the development of leadership skills on an ongoing basis or for a pre-determined time frame.
In most mentoring relationships for this particular role, the successor and the mentor will arrive at a time point where the need for the mentoring will diminish over time.
All of this sounds daunting as there seems to be a lot of moving pieces to the puzzle. It doesn’t have to be that way. There are people that can quarterback for you and guide you to professional resources that will work with you through the process. One such organization is SuccessionMatching.com.
SuccessionMatching.com is an online platform that allows business owners to privately find potential buyers. Also, they connect members with economic development officers and succession planning professionals who can provide resources and advice throughout the process.
There is no need to wait to plan your exit strategy. You can begin that journey now and reduce the stress in doing so simply by reaching out for some guidance. You have worked hard to create your legacy and now you need to ensure that your legacy continues on for years to come.
Begin the journey to build that succession plan today – can you afford not to? Think about it - how else can you sell your business wholeheartedly if not without mentoring!
References:
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