Business owners often work day and night to ensure the growth and success of their organizations. However, when it is time to design an exit strategy, many professionals hesitate to develop a comprehensive succession plan. Often, this crucial step is avoided based on commonly held beliefs that have no foundation in data.
Here are five common myths that can influence a business owner’s decision to create a succession plan:
- Succession planning is focused squarely on retirement: While the owner’s retirement is an inevitable conclusion of the succession plan, the focus should be more about developing a strategy for success. The mindset must be shifted from retirement to the continued growth of the organization.
- It would be easier to simply sell the business: Many business owners choose not to create a succession plan because selling the organization would be a more straightforward solution. An outright sale might prove easier in a ready and willing market. Many businesses, however, operate in a niche market where continued success is highlighted by stability and quality relationships.
- I can focus on writing it when I’m ready to retire: Creating a succession plan should not be considered a singular event. The seamless transition from one generation of owners to the next is an iterative process. Waiting for the last minute might lead to mistakes and oversights.
- I don’t trust that the next generation is ready: Successful business ownership is punctuated by gradual learning and adapting. Choosing the right individual for the succession plan is essential to ensuring your business continues to grow.
- Relinquishing ownership is the same as giving up control and income: Many people consider succession planning an all or nothing proposition when, in fact, the transfer of power can be a gradual shift.
Developing a comprehensive succession plan can be a complex endeavor. Putting the right individuals in the right place can be challenging. It is wise to work with an experienced business law attorney who can provide the guidance you need from start to finish.