Maintaining a successful perpetuation plan is essential for any business. Unexpected circumstances crop up all of the time. If you are not prepared, the future of your company can be severely compromised. As a business owner myself, early on one of my mentors told me there were two things to consider as my business developed. First, I needed to have a plan in place if something were to happen to me. Second, I needed to have an exit strategy in mind.
A lot of business owners assume they can start planning their exit six months before they leave. However, this can be a recipe for disaster. What you should try to do is to start planning at least five years out so you can have a smooth transition. To give you an idea of what a successful exit should look like, here are things you should consider at five-years, three-years and one-year before your exit.
Five years out
If you can see yourself leaving your business in about five years, now is the perfect time to start thinking about your options. Do you see yourself selling your business or just stepping aside from leading and managing? Is there someone you have been grooming to take over the company someday? If you do plan to sell your business, you need to consider what you need to do before you sell. Do you need to enhance your data security efforts? Do you need to secure a specific client? Does your website need updating? Do you need to diversify the products you offer? You must look into how you are going to present your business in the best way to make it a desire to purchase.
You also want to consider your business goals and your personal goals carefully. What do you really want to do with the next phase of your life? Do you see yourself taking on a hobby or another career when you move on? Consider your financial situation. How will the sale of your business impact your finances? If you do not sell, but have someone take over for you, what type of income will you receive?
Some of these questions can seem difficult to answer, but it’s important to be honest with yourself so you can logistically prepare for how things are going to be. Don’t merely have these thoughts in your mind. You need to actually write them down so you can have all of your options clearly in front of you. You can dig a little deeper, conducting research to identify the best route for you and your company.
Three years out
At the three-year mark, you need to have a good idea of the route you are going to go down. You need to have a plan in place and moving forward with your strategy. Communication is key at this stage. Everything should be organized with your consultants, financial helpers, and legal team. You need to ensure you are clearly communicating with all of the key players involved.
At this point, you should have identified a potential buyer or a successor. If you have found a buyer, you want to make sure they have the finances to actually make the purchase. If you will announce your successor, you want to make sure the individual is a high-performer and has the talent to take your business to new heights.
The size of your company will help to determine how much work will be needed to have all the key players up to speed on all aspects of the company. Identify what legal documents need to be drafted and if necessary, filed in court. Make a list of all documents with your signature that need to be updated. Is there any training that needs to take place? You will also need to work closely with your financial team to develop a budget and identify any hidden costs.
One year out
Now that you only have a year left, your plan must be solidified. You will want to have a fully executable written plan that identifies all the key players along with their roles and responsibilities. This will ensure that everyone has a clear idea of what is happening and they are all working towards the same goals. The plan should also include timelines so everyone will know when things need to be completed by.
When relaying your plans to others, you need to do so in a professional manner. You can get free Google slides templates here, which you can use to help you put together reports and presentations relating to your perpetuation plan. After all, you are going to need to present the plan and relevant information to potential successors and anyone else severely impacted.
If you intend to sell, you really need to be up to date with the industry and where it is going. For example, you’ll want to know if rates are going up or down, or if the industry is getting more difficult. This information is crucial for both your clients and your employees, as you could erode your integrity if you fail to do so. Prepare a full informative report or presentation that includes the plan and current picture of where the company stands – sales data, personnel data, industry trends, major competitors, etc. Anyone stepping in will know exactly where they and the company stand.
All things considered, if there is one thing that a lot of business owners get wrong today, it is waiting too long to start perpetuation planning. If you follow the tips that have been presented above, you can make sure that you have the correct timeline and that perpetuation planning goes as smoothly as possible.
Carolyn R. Owens has over 25 years of proven experience and serves as a Career Strategist, Executive and Leadership Coach. She is the President of Infinity Coaching, Inc. where she can help you up-level your skills, so you can up-level your income, career, business or life. Infinity Coaching, Inc. provides coaching, organizational training, personality assessments, and a signature program, the Infinity Coaching Inner Circle. Carolyn is certified to give both The Energy Leadership Index Assessment and Myers Briggs Type Indicator Assessment. You can find out more about both assessments and other products and services at https://infinitycoaching.net.
