Succession Planning for Your Business
If you are a small business owner, then you are one of the 1.2 million current Canadians entrepreneurs who have followed their dreams to form the backbone of the Canadian economy. Small business owners make up 97.9% of Canadian businesses who, according to Statistics Canada, employ almost 68% of working Canadians.
If this is you, then no doubt you have put countless hours into turning your dream into reality. From coming up with the initial idea to creating your business plan and ultimately brining your business to life, you know better than anyone the commitment involved. Your business is up and running, but what about the future?
Many small business owners are so busy running their business that they fail to consider what the future holds. The odds are that your strategy involves ultimately growing the business to a point where the plan is to sell it and retire. Perhaps your business is a family affair, and your goal is to pass your legacy on to future generations. Or maybe, you just haven’t had an opportunity to look that far into the future. It’s on the radar but you just haven’t got the time to worry about that now.
Having a proper business succession plan is just as important as having a regular business plan. You are the business, and you need to have a plan in place to protect it. If your strategy is to eventually pass on to your family or ultimately sell the business completely, your business succession plan is your roadmap to ensure this happens the way you envision. Additionally, if something unexpected were to happen to you, your plan must also have contingencies in place to protect you, your family, and the business.
So now that I have your attention, what does a business succession plan look like? The answer to that question is as varied as the number of businesses out there and what your plans are for yours. Some common questions to consider when creating a business succession plan are:
- When do you plan to exit the business?
- Are your plans short term or long term? (Under 5 years or 5 years and beyond)
- Do you have a particular date in mind?
- Do you have specific business goals that if achieved will determine the timing of exiting?
- Who do you want to take over the business?
- Do you have a specific successor in mind? If so, are you mentoring them now?
- If it’s a family enterprise, have you discussed your plan with your family, and do they actually want to continue to run the business?
- Do you have a business partner?
- Is there a key employee (or group of employees) that would be interested in buying the business?
- Is your plan to sell or merge the business with a competitor?
- Is your company healthy in the current economy?
- What is the value of your company today?
- Do you have financial records to support your valuation of the business?
- What impact do current interest rates have on the business?
- Does your business carry debt, and how does that affect your bottom line?
- Who manages the relationships with clients, suppliers, and other operating partners?
- Do you have employees capable of running the business immediately if necessary?
- Is your succession plan written out?
- Does your family or other trusted advisor have a copy?
- Does it reach 3 to 5 years into the future?
- Is there a tax plan included to minimize your exposure to tax liability?
- Are all the stakeholders included? (Who will be responsible for what and do they know what their responsibilities are)
- Is it up to date?
- Is your business protected if something unexpected happens to you?
- Do you have specific insurance to protect the business should you become ill, injured, or pass away unexpectedly?
- If you have employees with special skills necessary for your business, are they insured against illness, injury, or death?
- What impact will an unexpected event have on your personal finances?
- What plan do you have in place to deal with cash reserves, debt, accounts payable and receivable, investments in the business name, or other tangible assets?
- Do you have a team of advisors working with you?
- Does your plan include contingencies for tax, legal, human resources, or other operational support experts with the skills specific to your business ready to assist?
Running your business today is so much more than a full-time job. You created it, you’ve nurtured it to where it is today, it is your passion, and you want to see it thrive. Yes, it is hard work, long hours, blood, sweat and tears, but you wouldn’t have it any other way.
At Sea Glass Wealth, we understand what your business means to you. We have the expertise and experience to assist you with all facets of your business, including creating a business succession plan. We would love the opportunity to sit down with you to learn more about your business and how we can help it grow today to create your legacy for the future.
We are looking forward to the opportunity to meet you! For more information, please feel free to reach out.
Share this post: