Could your organization avoid one of these common mistakes?
When it comes to succession planning, thoughtful consideration is imperative in helping businesses remain viable. Review these common mistakes and the suggested success strategies to save yourself and your company from lost profits and leadership woes.
Mistake: Over-or-under-valuing the firm
Consider hiring a certified valuation analyst to conduct a comprehensive certified valuation and identify the actual market value of the business to find out what it’s really worth. This is important because an incorrect value could lead to a failed sale, acquisition, buy-out or an incorrect tax filing.
Mistake: Selling at the wrong time
Choose to sell when the company is making a profit and growing instead of following the path of the stressed owner who sells when the company is performing poorly or growth is stagnant. By having poor timing, you risk not being able to sell or having to accept less money than the company is worth. Losing money is not the goal here!
Mistake: Not allowing enough time for leadership transition
Plan ahead so there’s enough time to think through issues such as successor replacement, and business value drivers and more. It’s crucial to compile and assess business-critical information to provide a comprehensive picture to your successor of the company’s past, present and future vision.
Mistake: Not choosing a successor or choosing more than one
Find the person who most embodies the company – not the predecessor. You must choose and prepare one leader and empower them to run the company. It’s important to pick someone who thinks like an entrepreneur and has the experience, background and confidence to make hard decisions on a daily basis.
Mistake: Automatically choosing your son or daughter as your successor
Give equal consideration to non-family members. Remember, it’s not about who you like best. It’s about who’s most qualified. You want the successor to be perceived as an educated, prepared expert of the business, not someone chosen as a rite of passage. You want the business to thrive, not just survive!