There can be many advantages to selling a business internally, but there can also be some challenges. One of the main challenges is maintaining objectivity about the situation, including your potential successor’s capabilities and whether they align with the needs of the company. If you plan to transition your business internally, make sure that you take the time to properly evaluate your potential successor(s) and develop his or her business and leadership skills well in advance of when he or she will actually take over the business. Some managers are fit for future leadership, and possibly ownership, while some are not. Going from an employee to an owner is an interesting and tricky process that can be a challenge even for the most skilled manager.Read More
Topics: succession planning, Grooming a successor, choosing a successor, family business successors, business ownership transition success, Business Ownership Transition Planning, family business planning, family business challenges, passing business to my family'
“While 54 percent of business owners plan to leave their business in the next 10 years, 72 percent [of those] have taken no exit planning action,” according to a recent study. For most business owners, their business is by far their largest asset, and not properly planning for its transfer can put them, and their employees and family members, at risk. Being prepared is the key to success. It starts with owner education, allowing enough time to plan, seeking the best advice, and creating a Business Ownership Transition Plan (BOTP). A BOTP is a comprehensive written document that outlines how and when the ownership of a business will be transferred to others, either internally or externally, in order to achieve the owner’s long-term financial and personal goals.
Control as Deception
Success is the root of the word succession. But often the succession of a business is far from successful. I believe this is partly due to a narrow understanding of the word, which follows the dictionary’s definition. Here is how the Merriam Webster Dictionary defines succession:
There are five main factors, three internal and two external that can influence the value of a privately held company:
Proper transition planning creates a holistic, comprehensive, integrated plan that enables owners to one day monetize their business to provide financial fuel for another phase of life. At Business Transition Academy Inc., our definition of a Business Ownership Transition Plan™ offers a clear depiction of what we believe a transition plan is and accomplishes:
Have you developed a contingency plan for your business in case you die or become disabled? This is critically important. How many families and incomes would be affected if something happened to you tomorrow? How would your business function without you? Is there a written and realistic plan in place so that your management team and family could keep the business prospering?