Napolitano looks at money.
As a business owner, you always have a lot on your mind. You think about growth, cash flow, employees, liability and many other things. While each business has its own set of challenges and issues, we all have a few things in common besides COVID-19.
One of the least addressed issues is your succession plan. Your succession can be caused by a few things. It can be pre-mature death, a well planned retirement, an unplanned disability, or a keen awareness about when may be the optimal time to exit your business via a sale.
The absolute worst thing you can do is absolutely nothing. You and I both know that. Yet why are so many business owners buck-naked on this topic that’s so important to your customers, employees and family? Maybe it’s the fear of your own demise or, you simply don’t know where to start. I can help.
Start with the unfortunate chance that you will not wake up for breakfast tomorrow. With no plans, it is common to see a mad scramble for the reigns to be in control. I’ve seen many different iterations of this fiasco, and few ended prettily.
One of the worst choices is picking a spouse or loved one without the leadership ability or knowledge of your business to carry on. This frequently turns into a shark like attack where everyone sees the blood in the water and wonders what will happen next. Second worst is appointing a family member employee who isn’t the natural next leader. If that family member is already the #2 person in the company, that may be different. But leapfrogging a family member to the top because of the demise of the primary owner may also have its perils.
Regardless of the cause, a good succession plan requires both thought and communication. The thought is directed to the possibility of an involuntary succession and the preferred voluntary succession. Further thought regarding who does what and who assumes the leadership role is also critical. Architect a few financial incentives for those in the chain of succession now, before anything bad happens. Be careful here as you may upset some who thought that they were the obvious choice. But frankly, making a choice and having an intelligent discussion with your key people will generally make them feel better.
The communication piece is equally important. Your employees should know that you’ve considered this possibility, and that should something ensue, the company is prepared. Your clients and family should also know that you’ve made plans. This will help morale and eliminate any thoughts that your customers may have created in their own minds. Employees, customers and family will all have their own opinions about what you should do. Ask them, and consider their thoughts. But don’t get stuck with analysis paralysis. Hire a financial professional who has done this before and begin to lay out your plan.