Starting a business is an exciting and sometimes overwhelming proposition. Founders of companies often spend years putting most of their focus, planning and attention in building the business, scaling it and making it sustainable. One big way that too many entrepreneurs fall short is planning ahead for what will happen after they exit the company.
One study recently published by Wilmington Trust found that nearly 60% of privately held businesses in the United States had never even considered succession planning. An exit strategy should be discussed with key members of your team and this involves considering a few different priorities.
These priorities are continuing to meet customers’ needs, ensuring that employees still have jobs and a future within the company if they wanted and making sure that the company remains viable over the long term future. Given that more than 8 out of 10 business owners have not engaged in succession planning, you need to carefully consider what key talent in the company would be eligible to step up and take on these important leadership roles. You might assume that a child or other member of your family will be the natural successor to taking over the company but it is often the case that some businesses do not survive into the second or third generation. You need to have careful succession planning strategies in place to avoid these potential pitfalls and ensure a smooth transition when you decide to leave.