Business succession planning is one of the most important things when it comes to the stability of your business. Succession planning is when a company creates a detailed strategy of how a company will go forward with a change of owners and/ or leadership. A business succession plan is essential to ensuring smooth transitions. 

But here's the catch: lots of small businesses don't have this plan in place, which can cause problems when it's time for a change. Only about a third of small businesses successfully make it through an ownership transition.

Succession Planning Options

The key to a good succession plan is picking the right person to take over. It could be a family member, a trusted employee, or even someone from outside the company. Whoever it is, they need to be ready for the job. That's why it's important to take training or mentorship into consideration beforehand, so they can step in smoothly. Because at the end of the day, the last thing an entrepreneur wants to see is the business that they built from the ground up be broken apart or closed forever. 

And here's something you might not think about: this whole process can take a long time, sometimes more than 10 years! So it's important to start planning early, be open minded to different options, and above all else, be patient.

But it's not just about passing the torch. Business succession is also about keeping things steady for the community. When businesses close or change hands, it can affect a lot more than just the people directly involved. It can have a big impact on the whole community, especially in smaller towns.

The Great Grey Wave

To put this into perspective, 42% of businesses in Canada are owned by Baby Boomers. As this demographic continues to age, what do you think is going to happen when they retire? In many cases, a major portion of an entrepreneur's retirement savings are tied up in their business, either through equity, property, or inventory. This is a potential problem as they may not be able to successfully sell their business when it comes time to retire. Resulting in a possibly non-existent retirement fund.

A defined succession plan is like having a designated driver for your business – it ensures a smooth transition when you're ready to swap your files for golf clubs. Instead of looking to the future with uncertainty, there’s a clear and defined path ahead and you can implement it over time instead of feeling panicked and rushed. Planning a successful business succession takes years, and proceeding with said plan can take years to complete. So the time to act is now – not six months before you’re ready to retire.

So, there you have it! Succession planning might not sound as thrilling as a rollercoaster ride, but trust us, the alternative can feel like a nightmare. Think of it like planting seeds for a bountiful harvest down the road. Sure, it takes a bit of time and effort, but when you're reaping the benefits of a smooth transition, you'll be glad you took the time to nurture that succession garden.

Next Steps

Bottom line: business succession planning is a big deal, and more people need to be talking about it. So, if you are an agricultural producer or a business owner we encourage you to take our business succession survey. This provides the Brooks Newell Region with some introductory information so we can do more to help our local businesses and agricultural producers. We have the resources available for experts and professionals to help regional businesses develop their succession plans, for FREE, but we need to know who’s ready.

Help us help you succeed.

Take the survey: https://www.surveymonkey.com/r/JPNTYFM