Using an Outside Voice for Succession Planning Removes Emotion from the Equation
RCS Influencer Mark “Lefty” Holencik says that emotions can get in the way when developing your succession plan.
Succession Planning can start from the day you open your business or from the first time it crosses your mind. This will build the best value when negotiating your exit.
First question: Is your company worth anything if you are not there?
Your company has trucks, equipment, real estate [office – warehouse] leased or owned, phone number, company name, crews, accounts, customer list… How easy is this to put together? Trucks, equipment, real estate – these have the same value inside your business as on the open market. Your reputation gives the collective parts of your business its value.
Without a good reputation, just have a garage sale. The rest of this article will assume you have a good reputation.
Do you have anyone working for you, whether it be a family member or an employee to have a succession plan with, or will you sell the company to an outsider? If you have a family member or employee to work with this may give you a better deal. Since they will give the business some emotional value. An outsider will be focused on the numbers with less emotion.
Remember that you are emotionally tied to your business. This can work against you. Your emotions can give you blind spots that can make or break this process. Many business owners build their business without mentorship. This is the hardest way to do anything. I urge you to find an outside voice to guide you through this process. This does not mean that you give them control or the final word. They will give you another set of eyes on the plan that are not emotionally tied to the results.
Make a list of what you want out of this succession plan. Once this is done you can prioritize the list. From there you can put together how you would like each of these to look. As you do this you will have to go back and revise the previous work, because new ideas will come up. Also you will need to make choices between things that conflict. Which is the more important item in the end?
Are you going to work in the business for a period of time to help the new owner with the transition? You also need to know what you are going to do after this succession is complete. Knowing where you are heading will help you make better decisions. Most people make decisions based on how to get out of a situation. If you do not make this a part of your succession plan you may live with regrets. Let me correct myself. You will have regrets if you only make this process about getting out.
This will take negotiation. The new owner will have their vision and it may not be your vision. Can you live with that? This is your baby. You raised it to maturity. Now you are going to turn it over to someone who has no emotional stake in your baby. They may use it as a way to make money and nothing else. You may want to use this last bit of information to choose the name of your company. If your name is a part of the company name this will be harder to deal with. If the company name is generic to you and you gave it an excellent reputation, it will be easier to negotiate your exit.
Mark “Lefty” Holencik is the owner of Holencik Exteriors, Holencik Gutters and Holencik Insulation. See his full bio here.
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