“It can wait, I’m not going anywhere”, the very approach to one’s own business depicts an absence of a succession plan.
There is no better time than now to strategize for your business’s future. Also with ongoing plans, succession plans will evolve depending on several factors (current situation of business/owner, future plans for business/owner etc.). It is better to have a plan than have none.
Succession plan provides both an exit strategy and a plan to ensure the survival of the company with a transition or a sale. Succession plans are accustomed to address the inevitable changes that occur once employees resign, retire, are fired, get sick, or die. It offers an assurance that the business will continue to run effectively by identifying and training high-potential workers for advancement into key roles.
Today family owned businesses are recognized as significant and dynamic participants in the world economy. According to the U.S. Bureau of the Census, about 90 percent of American businesses are family-owned or controlled. Only about 30 percent of family-owned businesses survive into the second generation, according to the Family Business Institute. Twelve percent are still viable into the third generation, and only about three percent of all family businesses operate into the fourth generation or beyond. Also, of the world’s 500 largest family businesses, 27.8% (139) are located in North America.
These statistics proves that succession planning is incredibly important in such a set-up for these businesses to survive and prosper from one generation to the next.
Starting a business, running it, growing it and repeating the same process over and over again is a painful but rewarding process for those that have done it. It’s hard to recall a single successful business owner that has said, ‘It was easy or it was all luck’. There is just no substitute for hard work.
Having a succession plan early on also helps potential future buyers of your Company to evaluate your Company. A potential buyer is more likely to value a business higher if he/she knows that a business owner has taken the time to develop and put a plan in place because any new buyer is going to look for continuity when acquiring a business for some period of time before they make any changes post acquisition. A business that has been a one man show distracts potential buyers or does not position itself for a higher valuation.
At AR2, several of our team members have come from a family of several small business owners. They have seen the hard work that goes in day in and day out to create, operate and grow a business. We would like to share our experience and help you realize the true potential of your business.
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