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June 11, 2012 at 02:37 PM
You offer products and services supporting your client’s continuity and succession plans, but when was the last time you reviewed your own succession status? If it’s been awhile, you probably suffer from the sort of procrastination that plagues most small to medium-sized businesses. Continuity and succession are universally recognized as important, but they are seldom urgent —and therefore, they receive low priority. The problem is that important issues eventually become urgent. Think: “Hit by a bus!”
If you can make a successful transition, the realized funds can be 50 percent of the accumulated profits over the life of the firm, so it should pay to make a serious effort to execute an intelligent exit.
Think about this: What advice would you give yourself if you were your own client? Your first recommendation would be to protect the asset (your firm). This is possibly 50 percent of your net worth. You know the drill: Buy/sell agreements with insurance to cover purchase of a deceased partner’s equity, key-man insurance, business interruption insurance. Add disaster recovery for your operations systems and an interim management transition plan, in the event that you were not available for a period of time. Assess the capability of your staff to rise to the challenge of running the show.
The second stage of the plan would be to ask yourself, “When do I want to leave and what will I do when I am out?” This can be built into a personal vision statement. This document can become the motivation that drives timely implementation. An added consideration is your recognition of the value of the personal time that an exit would create. How much is each hour of unstressed leisure worth to you? Put a dollar figure on that and factor it into the decision process. It has been said that the golden years are over-rated. Do you have non-business objectives that need good health and energy? Clarification of personal expectations allows calculation of the funds needed to support them, and that leads to assessment of how funds from the sale would be invested.
