You’ve started a business. You’ve grown that business, and you are on the right track. Then, someone asks if you have a succession plan. You might think, ”I’m not ready to sell my business,” or “my son or daughter will take over the business,” or “I don’t have anything to sell.” Well, I am here to tell you that every business should have a succession plan because one way or another, every business will transition ownership at some point.
At the NWFA Expo, we are going to present and discuss the purpose of a succession plan, how a company can effectively put one together, and the importance of getting started well in advance.
Succession planning may seem to many like something you do right before you get ready to sell the business. However, that would be like waiting until you were just about ready to retire to start putting money in a 401(k). For the same reasons it makes sense to plan for retirement early and drive the value of your investment funds, it makes sense to create a succession plan early so you can drive the value of your company.
One of the difficulties with succession planning is that there are so many unknowns. How long will you want to work? Will the kids want to take over the business? How do you even go about selling a small or family run business? All of these are good questions.
During our presentation, we will be sharing a Transition Planning Framework tool that allows business owners to determine what things are known, what things need to be researched, and what things will have to be decided or negotiated much closer to the transition. With that plan, we can start focusing on the key determinant for a good succession – creating a more valuable company.
Next, we will explore how to measure a company’s value and which factors, beyond just the financials, drive that value. Most businesses focus on driving profitability, which is certainly important, but also miss the opportunity to drive the value. Using a tool called “Value Builder,” attendees will be able to take a quick assessment and get an idea of where they stand on eight critical factors that will drive their company value.
Finally, we will focus on how to take the next steps in the planning process. Many of the changes that a business owner will want to take to enhance and increase the value of the business take time. Whether it is a marketing strategy, training team members for their next position, embracing new technologies, or recruiting for key positions, it is important to sequence those steps properly and give those actions time to generate results.
The journey toward succession is one that every business is on (myself included), whether it is by design or by default. As we cannot work forever, the business will transition eventually. For some it will go to the next generation. For some it will be sold to an unknown. To others, it will simply close when the last project is done.
I truly believe that every profitable business has value and that business owners have more to sell than many realize – reputation, processes, trade relationships, etc. Whatever way a business transfers, it is better for both the founder and the successor (if there is one) that a succession plan was done years before the transition, and focused on driving the strength, profitability, and sellability of the company.
The session at Expo in Charlotte will be fun, informative, and full of useful tools for your business. Like the city we will be in, with its long heritage in stock car racing, we will be focused on getting your business successfully over the finish line. I hope you will join us.
Doug Howard is the president of Growth Team Strategies, based in Sykesville, Maryland. He specializes in helping wood flooring contractors develop strategic plans, streamline processes, improve profitability, and navigate growth. For more information, email him at doug.howard@growthteams.com or visit growthteams.com.
