Just like your strategic business plan, marketing plan or financial plan, a succession plan is an essential tool to chart the best course of action now and into the future.
The ideal time to develop your succession plan is when you start your business -- incorporating your transition goals in your business activities from the very beginning. It will help guide you toward critical goals you have for the organization and help you negotiate the problems that are inherent to governing a family business over time.
Business owners often hear that they should have an Exit Strategy or Succession Plan as a part of an effective business plan. However, in our experience, those plans are rarely developed and, if they are, the strategy is not reviewed regularly to ensure its suitability or viability.
So, what is the difference between an Exit Strategy and a Succession Plan? Often used interchangeably, the terms both have to do with you leaving your business -- but the end goals make them quite different.
An exit strategy is defined as the business owner's removal from the business. They can occur whether or not the business continues. Succession Planning, however, includes a focus on the business continuing when you are ready to step away.
Whether business owners are motivated to sell or pass their businesses to the next generation within the family, understanding what creates value in a business and how to maintain that value is key.
Whatever direction owners choose to go, it is important to have a strategy: a path that ensures an efficient and comfortable transition, a path that achieves a win/win outcome for all involved.
Failing to plan and manage succession is one of the greatest threats to your family business.
CITEC can help you connect with the right expert resources to effectively chart your Succession Plan.