Succession Planning is Successful Planning
Among the many positives of northern Michigan’s business community is the vast number of local and family-owned companies across our business landscape. That’s important as local and family ownership often brings various assets to a region that extend well beyond a company’s bottom line. Local owners tend to have more of a community connection to their employees, to business or civic organizations like the Chamber of Commerce or Rotary, and to local charities or other community initiatives. Major business decisions are made by local parties with an eye on how they impact their friends and neighbors.
But as our population ages and a growing number of baby boomers look toward retirement, it’s important that they don’t lose the community connections they’ve worked for years – and sometimes decades – to create. Developing a thorough succession plan for a business can help a business owner or owners ensure that their positive impact on their employees, their passions and their community won’t dissipate when they’re no longer minding the store.
Planning for a company’s future when the founder, owner or primary principals aren’t part of the equation can be a daunting, even unpleasant thing to consider. But a good business succession plan is something that can create value for a company, offer peace of mind to employees and business partners and ensure that someone’s business legacy can live on long after they’ve moved on.
“Succession planning is an incredibly hot topic for our office, and around the state,” said Annie Olds, regional director and business consultant for the Small Business Development Center (SBDC) office in Traverse City.
Historically, succession planning has often been a back burner topic for business owners. In many cases, business owners relied on their families as their primary succession option. Either a spouse, son or daughter or another relative were part of a business and would step in if necessary – whether or not they were ready to take on that role. But in a world of shrinking families and increased worker mobilization, a growing number of small companies are finding their family options are limited. It’s no longer a given that a son, daughter or other relative will step into mom and/or pop’s business.
Succession planning can also be daunting as it can sometimes require talking about difficult subjects. People would rather plan for new markets, customers, products and services than preparing for retirement, an accident or illness, or other personal circumstance that alters their business world.
A better way is to look at succession planning as an integral part of an overall business plan. One doesn’t plan a business trip or vacation without charting their way back home. Similarly, a solid exit strategy is a means of bringing a business vision full circle, to ensure that a company can continue humming along and remain engaged with their employees and community through internal changes. In many ways, good succession planning can create stability and a long-term vision often missing in a small business.
“It will help add value to the other people who care about your business; your lenders, your accounts, and especially your employees,” Olds said. Uncertain futures can create stress for both a company’s staff and business partners. A succession plan that’s clearly spelled out for employees and business associates can bring peace of mind to others who count on your business skills.
It’s never too early to start working on a succession plan. No one knows what the future holds, and delaying a succession plan until old age, an accident, health problem or other unforeseen circumstances that forces one’s hand can hinder development of a solid exit strategy. A few months is not sufficient time to create an effective plan, Olds said.
“Businesses should really be thinking about this two years before they’re ready to get into it,” Olds said.
The good news is that business owners can find reliable and affordable assistance through organizations like the SBDC and Venture North to help them create a succession plan that will bring value and stability to something they’ve worked so hard to build. So many of our region’s business owners have shared their skills, knowledge and success well beyond the walls of their operations. It’s a major part of what makes the Grand Traverse region such a special place. To sustain that success, it’s critical that the next generation of business owners can step in and fill those big shoes.
Laura Galbraith is executive director of Venture North Funding & Development, a business financing and development organization associated with the Traverse City Area Chamber of Commerce. Contact her at email@example.com.