by Dave Driscoll
Succession or exit planning is usually thought of as a necessary evil to prepare for that eventual day when you turn over your business to a new leader.
But guess what? Succession planning strengthens your business long before you are ready to sell it or transfer to the next generation or key employees. Turns out, many aspects of succession planning will help your business be more profitable and run more smoothly now:
1. Corporate hygiene. Financials. Analyzing profit-and-loss and balance sheet trends monthly or quarterly allows you to correct any issues immediately and capitalize on emerging opportunities. If you look at these numbers only once or twice a year, the cake is already baked! Use the objective feedback provided by your business financials to correct course promptly.
Process documentation. Could someone walk into your business and easily find the information necessary to keep the company operating smoothly on a daily basis? All processes – sales, operations, HR – must be thoroughly documented. The process of documenting is very eye-opening. Involve all employees who are part of any given process or system – they know how things really work. Together you will likely uncover ways to be more efficient, accurate and profitable.
2. Management development. Businesses perform better with a strong leadership team. Sharing the planning and decision-making roles may be difficult at first. Selecting a few key employees whom you trust and believe in allows you to mentor and develop their leadership skills. Create your team and use those employees as a true sounding board. Do not surround yourself with people who just tell you what you want to hear. Thinking critically and playing devil’s advocate are valuable qualities. Delegate responsibilities and teach rather than punish for sincere mistakes. Also, be realistic about the strengths and limitations of those who may be presumed leaders – quantify and qualify. The ultimate goal is to make your business less owner-centric, which increases business value and gives you time to focus on strategy – and to take a vacation.
3. Employee engagement and empowerment. As referenced earlier, your employees are the ones who know the real deal about how things get done every day. Do not discount their insight! Foster a company culture that seeks and implements practical employee suggestions. Share basic company financials and the corresponding short-term and long-term goals with all your employees and empower them to help the business reach those goals. When the goals are reached, celebrate together and then aim even higher.
4. Common goals and priorities. Perhaps your business goals and priorities seem obvious to you, but can all your employees articulate them? Clearly identifying, defining and reinforcing goals reminds every employee to collaborate for the greater good. This enhances productivity, efficiency and customer satisfaction.
5. Process improvements – SWOT analysis. At least once a year, include your employees in examining your business’ strengths, weaknesses, opportunities and threats (SWOT). Encourage honesty because pretending will not help your company survive and grow. How can your business improve? How can advantages be promoted for more gain? This analysis should range from practical steps that can easily be implemented to big-picture strategies. Don’t forget to examine industry trends and consumer preferences; anticipating and adapting to those trends may mean the difference between survival and becoming obsolete.
Implement these five strategies and reap the benefits of a cohesive, efficient business. You will also be on your way to meaningful succession planning. Then work with your M&A adviser to address your personal needs, wants and priorities for your Life Beyond Business.
Dave Driscoll is president of Metro Business Advisors, a mergers and acquisitions business broker, business valuation and exit/succession planning firm helping owners of companies with revenue up to $20 million sell their most valuable asset. Reach Dave at DDriscoll@MetroBusinessAdvisors.com or 314-303-5600. For more information, visit www.MetroBusinessAdvisors.com.
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