Sign & Digital Graphics

January '17

Issue link: http://read.uberflip.com/i/767484

Contents of this Issue

Navigation

Page 76 of 104

70 • January 2017 • S I G N & D I G I T A L G R A P H I C S Succession Planning Shouldn't Just Be an Exit Strategy A study about, and the myths and realities of why you need to have a plan B Y V I N C E D I C E C C O Make it Your Business of something happening unexpectedly. Or, perhaps, giving yourself—as the business owner—peace of mind that all will be fine once you don't want to be involved in the day-to-day. Whatever the reason, suc- cession planning is a critical-path, decision-making process that has a direct impact on long-term busi- ness viability and profitability and it warrants some consideration. Myths and realities David Scott, vice president of advanced sales at Penn Mutual Life Insurance Company, recently wrote an online article for WealthManagement.com shar- ing what he believed to be the myths and realities of small business succession planning. Along with the "there's plenty of time" myth—which Scott dispels with the salient point that time is either your ally (if you plan during the good times) or your enemy (if you procrastinate and are forced to plan during more chaotic, uncertain or expensive times and your choices become limited)—he offers four other myths: • "It's easier to just sell it" • "A successor will be ready when I'm ready" • "Dividing it 'equally' among heirs is synonymous with being fair" • "Giving up ownership means losing control and income" Scott explains, "Finding a willing buyer for any business is rarely just a matter of hanging up a 'For Sale' sign." It's really a matter of timing. Calculating the 'fair market value' for the business at a particular point in time, and then simultaneously finding a buyer who is able, prepared and eager to buy it right then, at that price, takes a good deal of luck and coordination. Believing an adult child or designated apprentice- heir will miraculously "rise to the occasion" is wishful thinking at best, and foolhardy at worst. Scott states, "A successful succession plan builds into the appren- ticeship not only the mastery of business tasks but, equally as important, the building of business relation- ships." It doesn't just happen on its own. Let's say a business owner—in the spirit of fair- ness—intends to divide a business into thirds, one part for each of three children. Except, one of the siblings is the aforementioned apprentice, who pays I recently received a copy of a Human Capital Media survey report about succession planning—which companies have them, trends in developing one, and how a succession plan is integrated into other busi- ness functions and decisions. I found the results of the research fascinating and thought-provoking. For example, did you know that only 37.3 percent of the responding organizations already had a written succes- sion plan, but another 45.5 percent were working on theirs? That tells me smart business owners see value in developing one and doing it now—regardless of the motivation to do so. Many survey takers cited "having an exit strategy for the business" as the reason for putting together a succession plan—mainly for the purpose of selling it. Others claim a succession plan is appropriate to ready the owners' children to take over the reins. Family- owned businesses account for a staggering 50 percent of the gross domestic product of the U.S., and it is not just in small storefronts or home-based businesses. In fact, 35 percent of Fortune 500 companies—both pri- vately and publicly held—are controlled by families. But, history shows that only one-third of family busi- nesses successfully pass the baton to the next genera- tion. Continuing a business beyond its founding genera- tion of leaders requires a sound strategy and methodi- cal planning. Don't shy away from succession planning just because "there's plenty of time for that later on." Devising a formal succession plan now could mean outlining how to prepare someone who would be able to step into the shoes of key personnel in the event Vince DiCecco is a business training and development consultant and owner of the Acworth, Georgia-based business, Your Personal Business Trainer, Inc. He has been sculpting his sales, marketing and training techniques since 1979, and he has shared innovative and practical ideas on business management excellence for two Fortune 200 com- panies, the U.S. Coast Guard, and in seminars at past NBM Shows. Since 2003, he has been serving small- to mid-sized companies in their efforts to strive for sustained growth and market dominance. Contact him via email at vince@ ypbt.com or visit his company website, www.ypbt.com. RUNNING THE BUSINESS

Articles in this issue

Links on this page

view archives of Sign & Digital Graphics - January '17