We discussed how succession planning is a critical step when you are in business, and now we will discuss options to consider when you start succession planning. It’s important that all the decisions you make when you embark on succession planning are strictly business. Succession planning isn’t the time to worry about people’s feelings; it’s about furthering the success of your business when you retire or pass away.
3 Types of Succession
There are 3 common types of succession. Each strategy works differently for each individual business. As the business owner, you must decide which one is right for you and the successes you have conquered.
Sell to an insider
The insider can be a family member or a management company. Keeping the business in the family will generate a generational wealth for years to come, but you have to be certain your family is prepared for the transition. Also, don’t forget the loyal and competent employees who have contributed to your success. If there is a certain person with whom you trust your decisions with, talk to them about your exit strategy and gain their support for your future decisions. You want your employees to be on board with your decision, or they will make it very difficult for the business to succeed once you are gone.
Sell to a 3rd party
Selling to a 3rd party is usually decided when there is no immediate family to pass the business down to, or the business owner believes there is not one who is fit to lead. The business owner can ultimately decide to sell the business altogether and live off the income from the sale. It’s important to go back to the investment strategy step again and look at your options for reinvesting the funds from the sale of the business.
Work until you die
Unfortunately, this is the most common course of action, and it is a process that can be avoided. If you, the business owner, fail to create a plan of succession or neglect to invest your earnings, you will be forced to work until your time is up. You won’t have the option of enjoying the luxuries that come with owning your own business, and you will lose sight of why you did it in the first place. If your goal was to become financially independent and successful within the community, you will find yourself working without passion and running your business without purpose. When you pass away, the decisions will be made up to your family, and your wishes for the future of your company will no be considered because you won’t be around to oversee the changes. This is the most detrimental option for you and your business, and it guarantees a depressed value of the business you worked so hard to create. Think of a yard sale: you spend lots of time and money on something, but when the bargain shoppers come around, they nickel and dime. Your success is no longer a factor in the value of your business.
We Are Here To Help
Have an exit strategy, before one is decided for you. Enjoy the benefits of owning your own business and revel in the life it can give you when you are ready to leave. Let our experts help you with any of you bookkeeping, payroll or tax needs. Contact our offices in Oklahoma City: 405-720-1244 or Tulsa: 918-477-7650 to get the help you need.