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Simplifying Succession Planning: The Right Way To Get Started

March 25, 2019
There are a lot of steps involved with passing on or taking over a business–no matter which side of the transaction you’re on. Having a better idea of what the process is going to be like from the start will help the succession planning experience be a lot less overwhelming.

There are five main steps to begin succession planning:

  1. Legal & financial planning
  2. Emotional evaluation
  3. Retirement planning
  4. Efficiency improvements
  5. Managing the work-life balance.

You can find a detailed look at each of these steps in this complimentary copy of the Solink Succession Planning Survival Guide, but keep reading to get a preview and some general information.

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Click here to download the complete Succession Planning Survival Guide to get a better understanding of the whole process.

Step One: Comprehending financial and legal lingo

It sometimes feels like you need a law degree just to talk to a lawyer, but that doesn’t have to be the case. If you are able to prepare yourself with some intelligent questions to ask, you should be able to target your conversation, and get the information you actually need without everything getting too complicated. Our survival guide gives you questions you’ll want to ask.

Plan early

The first thing you need to do when setting up your succession plan is to establish a timeline. Experts recommend that you give yourself at least three years to make all of the appropriate arrangements, but it’s beneficial to give yourself even more time. There’s no such thing as starting your planning too early. Use the guide’s timeline chart to keep on schedule.

Establish the value

Getting an official valuation of the company is your second step. Having a general idea is not good enough; you will be much better off if you have professionals evaluate the value of your company to be able to find an appropriate buyer. Even if it’s a family member, you need to be able to provide them with a trusted and accurate value that they can take to the bank.

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Who’s the Boss?

Once you have the valuation, you can begin to identify the right buyer. Consider the valuation of your company when deciding who to sell to. If it was given a high valuation, it may be more beneficial for you to sell to an outside party. If you still want to sell to a family member, it’s important to know whether or not your family member actually wants the business. Assuming someone specific will take over the business can lead to poor business decisions. It’s important to consider all of your options when it comes to your business.

Get all your ducks in a row

After you have chosen the buyer for the company, it’s time to get into due diligence. You’ve got to go through each and every detail possible, examining and revealing the financial, legal, and administrative items that are currently on the books. You’ll have to discuss bank loans, contracts, leases, and more, so having a non-disclosure agreement in place is important.

For a guide to due diligence, check out the Succession Planning Survival Guide.

How Solink Helps 1
The Discovery Dashboard is an amazing tool that business owners can use to better understand their operations. Having a better understanding of how your day-to-day is being run can make it easier to get a more accurate valuation.

Step Two: Managing change, and evaluating emotions

Once you have the practical factors of your plan worked out, you need to consider the emotional factors that may affect your choices. There are a lot of important questions that need to be asked by all parties involved, including:

  • What exactly is being transferred?
  • Why do you want to transfer the business to the person you selected?
  • Why do you want to take over this business?
  • What are the expectations of the original owner and the new owner?

The emotional impact of transferring a business is often ignored. It’s not like leaving a regular job; owning a business and passing it off is a difficult thing to do. There can be a lot of emotions lingering even after the business transfer is completed, so it’s very important to evaluate the emotions in depth to prevent any feelings of regret or missed opportunity.

Step Three: Planning for retirement


Establishing a timeline is something that has already been completed in earlier steps, but it’s also important to consider what you’re going to do post-retirement. After selling a business, the original founder is going to need time to adapt to a new identity. They will no longer be a “business owner,” they will instead be, “retired.” It’s a big change, one that many people fail to prepare for. Having concrete plans of what you will be doing with your post-retirement time worked out in advance helps reduce the identity dissonance, and gives you a bit of extra time to adapt to the upcoming change.

Step Four: Evaluating efficiencies and implementing improvements

Once the business is transferred to a new owner, there will likely be a variety of changes. Being sure that you have a good understanding of not only what you are doing for each policy currently, but why you are doing it in that way will help to better establish which policies are effective and which can be improved. Some people like to think, “If it ain’t broke, don’t fix it”; but sometimes there is a better process that can give faster, more efficient results.

Having the right tools in place makes dealing with change easier, so going through each of your policies and procedures with a fine-tooth comb is extremely valuable.

How Solink Helps 1
Get total visibility into every shift, every site, and every sale. By integrating with your POS, Solink makes your existing systems work smarter. By pairing each transaction with the contextual video, you’ll always have the complete picture for everything happening in your store.

Step Five: Conquering the second generation curse

What is the second generation curse? Well, unfortunately, the majority of second-generation business begin to struggle shortly after the ownership transfers. This is why it’s so important to choose the right person to take over the business. It’s not just about planning before the transfer, it’s also important to make sure that the expectations and mindset of the new owner are in the right place. Managing a work-life balance is the key to surviving a second generation business. Having the ability to manage stress, enjoy life, and work effectively is crucial to being able to sustain a business long-term.

Succession planning may not be the easiest process in the world, but with the right tools, you’ll be ready to navigate all of the steps with ease.Download the Succession Planning Survival Guide now to simplify your plan now.

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Click here to download your free copy of the Succession Planning Survival Guide to hear more expert tips, get access to handy worksheets, and learn more about the process.