While reading the September 2019 edition of INC Magazine, I was surprised to learn that a small percentage (21%) of the companies in the 2019 INC 5000 have list succession plans, and an even smaller percentage (12%), have a plan but have not identified successors. Therefore, two-thirds of the fastest growing private companies in America are at risk of a major disastrous, disruptive event. While the INC 5000 companies have grown extraordinarily fast, in most other respects they are typical of the general private business landscape in the USA, and probably the world. I’m guessing that at least two-thirds of you don’t have a succession plan. That adds up to a lot of potential clients for me and my ActionCOACH colleagues.
Why do you need a succession plan? There are numerous reasons, some of which include:
- As mentioned in my blog Why You Should Prepare Your Business To Be Sold dated 10/23/2018, “A business that is designed and built for the owner’s exit will provide protection to the business’ team and the owner’s family. There are too many instances of businesses that failed after an owner’s disability or death. The potential for destruction of value, jobs and fortunes is reason enough for you to prepare your business for your exit.”
- A long time ago, a very wise insurance broker explained that a business owner in their forties or fifties is eight times more likely to become disabled than to pass away before retiring.
- A business that is prepared for succession and owner exit is a stronger business.
- If at some time in the future you sell your business to outside potential buyers, they will be attracted by the increased potential to retain the company’s human capital.
- If at some time in the future you sell the company to your employees, the key employees are more likely to remain. The result is a company with a much greater potential for longevity and ability to retire the financing used to purchase the business.
- For all these reasons a business that is prepared for succession and owner exit is a more profitable, valuable business.
One of the main focuses of the ActionCOACH coaching process is planning. Among the many types of plans our clients have is a succession plan and, depending upon their age, an exit plan. If you wish to protect your business should you become incapacitated or prepare your business for your exit and earn more money until you decide it is time to exit, my colleagues and I are ready to assist you.