Business is booming, and you are busier than ever. Your company is expanding at a crazy rate. But, what if something were to happen to you? Would your company be able to carry on in your stead, or would it crash to the ground in a blaze of glorious defeat?
The future is random and unpredictable, and you don’t know what can happen. If you were to suddenly die or become incapacitated and unable to carry on in the workplace, what would happen to your company? You need a succession plan to make sure that its future is secure. But, ironically, 66 percent of business owners either haven’t thought about it much or haven’t put it down in paper, according to the 2014 U.S. Trust Insights on Wealth and Worth Survey.
How Much Are You Worth?
This particular survey was targeted at high net worth individuals; 680 people with assets estimated as high as $3 million. Here are some statistics surrounding these high net worth business owners:
- 87 percent of high net worth business owners started their business themselves, while 13 percent inherited it.
- 87 percent don’t expect their children to keep the business running when the end is nigh.
- Two-thirds don’t have a succession plan set up. By age 50 or older, that percentage increases to 70 percent.
- Entrepreneurs with financial advisors are twice as likely to have a succession plan than those who don’t.
Why Wouldn’t You Want a Succession Plan?
It seems silly that such valuable people wouldn’t have a succession plan set up, especially if the future of their business depends on it. Many of them simply don’t put forth the effort to put a succession plan into writing, and continue procrastinating. Others imagine that a written will or a verbal declaration takes care of the problem easily enough. More than half of these individuals also say that they have no plans of retiring, but let’s be honest; nobody can live forever, and sooner or later, you’re going to be forced from your seat of power by the human body’s physical limitations. And what happens when life throws them for a loop and they wind up unable to move in a hospital bed, or six feet under? That succession plan sure would have been nice to figure out, huh?
What Should I Do?
You don’t want your business to crash and burn because you failed to prepare for the worst. Here are three things you can do to prepare your business for the future:
- Is it a family matter? If the company is family-owned, check and see what options you have for a familial management system. If you don’t want your business to be handed down to your family, look around and see who is exceptionally capable in your company. Basically, it all comes down to good communication between management and the average employee.
- Put your plan in writing. After you come to an agreement, write it down and record it in official documents. You want them for future reference and in a safe place, in case the worst happens and your company needs to find it.
- Hire a lawyer and ask questions. You want someone who knows how to deal with business succession plans and someone that can get you the most fair value estimate available. There are also a variety of succession options to go through, many of which won’t be right for your business. But, with the help of professionals, you’ll be able to figure out the best option for your company. This way, you can rest easy knowing that your business will be in good hands long after you’re gone.
When it comes to your livelihood, you don’t want to take any risks. By setting up a succession plan, you can be sure that your business has a solid strategy in case things take a turn for the worst. For more best practices and tips, contact Tektonic at (416) 256-9928.
Tektonic Managed Services is an IT Support and Computer Services company serving Toronto GTA. We provide services in and around Toronto, including York Region, Durham Region and Peel Region. Businesses like yours need technology support to run highly-effective organizations. Leverage pro-growth technology services for your company now!