Why you need to develop a successor

Leadertalk blogger Becky Robinson of Mountain State University’s* School of Leadership and Professional Development writes about the importance of developing others as part of your succession plan.

Her experience in developing a core group (or even an individual) to carry on the work you began is a good example of how to prepare your company for sale even if you’re years away from selling.

She writes: “If you are passionate about the work you do, you need to build into others and help them develop their abilities. It’s the only way to ensure that what you’ve started continues.”

The example she gives for her posting is a home-schooling cooperative, but that mind set – making sure someone is there to carry on – applies to anything you might be passionate about, especially if it’s a business you have built and nurtured over many years.

My book, How to Sell Your Privately Owned Company, makes a few salient points about having a succession plan:

Ultimately you should have a well-defined succession plan in place that you share with family members, partners and possibly key employees.

For many business owners the best plan is one in which they sell their business and agree to stay on and run it for a set number of years. This allows them to take a significant amount of cash off the table, meet the needs of their estate and protect their family and their personal retirement. By selling the business early and agreeing to stay on and work for at least another five years, they put their exit strategy in place and while they are alive, well and healthy they can make sound business decisions.

People who plan are generally more successful than those who don’t. Waiting till the last minute to sell your business is not a plan; it is an act of desperation.

Whether you have a favorite potential successor, or someone you want to mind the shop after you sell, you need to have a succession plan in place and you need to groom your successor.

Eric R. Voth is a serial entrepreneur, a private investor, consultant, and writer. He is author of How to Sell Your Privately Owned Company, a Basic Guide for Independent Business Owners, Baby Boomer’s Edition. Eric and his colleagues help a business Seller prepare and groom his or her company prior to offering it for sale or merger – then guide the owner through the actual process. He became involved in this field as a result of merging his own company in 1993.

* Mountain State University, a not-for-profit private university in West Virginia, was formerly known as Beckley College. MSU has rapidly grown in the last two decades from a two-year college to a university that offers bachelor’s, master’s and doctoral degrees.

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