3 keys to business owner succession planning

“Whether you think you can, or you think you can’t – you’re right.”   Henry Ford

Ford understood all too well that your destiny may be as much about your attitude as your circumstances. Think you are going to succeed – you are much more likely to succeed.  Think you are going to fail – well you know how that will likely end.

Attitude

Attitude applies to succession planning as well. Do you think selling your company will take a long time?  Do you think you won’t get a fair price?  Do you think your legacy can’t be maintained?  If you think any of these things they are much more likely to come true than if you believe just the opposite.

So, why is there so much doubt in the process that leads to the negative thinking? Most business owners start succession planning much later than they should and generally don’t engage professionals soon enough to help guide them.  Time and guidance can provide choices, and confidence, to the selling owner.

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Timing

When should you start thinking about succession? Age 50? Ten years before you want to sell?

How about when you write your original business plan? This allows you to build an organization where you can ultimately access the value on your terms. This allows you to consider legacy and how decisions you make along the way may impact that.  Simply put, you cannot start thinking about succession too soon.

It is difficult to be really good at something you only do once. Yet, most business owners only sell once.  Not surprisingly, they may not be well versed in what needs to be done and what their options are.

Guidance

Engaging a financial professional can help with planning for succession. They can help you understand your needs in retirement and what may be realistic timing.  They can help you value your business.  They can provide buy sell agreements, etc.  They can also bring ideas such as Employee Stock Ownership Plans for consideration.   The financial professional understands that this is a journey, not just a destination.

Time and guidance are wonderful things as you contemplate succession. Are you prepared?  If not, what is stopping you now?

In addition to blogging here, I also tweet regularly about topics of interest to ESOPs. Follow @twitter 

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This document is intended to be educational in nature and is not intended to be taken as a recommendation.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

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