Why succession planning is important
How knowing what succession planning is and knowing what's at stake will help you to make wise decisions.
Having a succession plan is important but many family businesses do not have plans in place.
Common reasons include resistance by the owner to let go of the reins, fear of retirement or inability to find or choose an effective successor.
Transferring ownership can be highly emotional and complicated, which is why often it is ignored until it becomes a pressing issue, for example, when the owner becomes ill or too old to carry on running the business.
Often, business owners are busy dealing with day-to-day issues and consequently end up failing to attach enough importance to planning succession.
Why have a succession plan?
Leaving succession planning until the last minute is likely to mean effective transferral of ownership is not possible within the necessary time frame. A forced, ill-informed or panic decision could mean the business is transferred into reluctant or unqualified hands.
The business could be severely disrupted as conflicts take place over who should own or run the business, while uncertainty and lack of leadership could have a disastrous effect on sales and morale within the business.
All of the above could ultimately result in the failure of the business. Setting aside sufficient time to think and formulate an effective succession plan is an important key to success.
The benefits of having a succession plan
An effective succession plan should form part of your overall business development strategy.
Knowing exactly how, when and to whom ownership will be transferred is the most likely way to maximise your returns.
Choosing the right successor and the right time to transfer the business is the best way to ensure the ongoing success of the business.