Viewing posts categorised under: Succession Planning
25Sep
Don’t let “founder’s syndrome” impede your succession plan
Succession Planning

 

Are you the founder of your company? If so, congratulations — you’ve created something truly amazing! And it’s more than understandable that you’d want to protect your legacy: the company you created.

But, as time goes on, it becomes increasingly important that you give serious thought to a succession plan. When this topic comes up, many business owners show signs of suffering from an all-too-common affliction.

The symptoms

In the nonprofit sphere, they call it “founder’s syndrome.” The term refers to a set of “symptoms” indicating that an organization’s founder maintains a disproportionate amount of power and influence over operations. Although founder’s syndrome is usually associated with not-for-profits, it can give business owners much to think about as well. Common symptoms include:

Read More
23Aug
Ensuring a peaceful succession with a buy-sell agreement
Business Ownership

 

A buy-sell agreement is a critical component of succession planning for many businesses. It sets the terms and conditions under which an owner’s business interest can be sold to another owner (or owners) should an unexpected tragedy or turn of events occurs. It also establishes the method for determining the price of the interest.

This may sound cut and dried. And a properly conceived, well-written buy-sell agreement should be — it is, after all, a legal document. But there’s a human side to these arrangements as well. And it’s one that you shouldn’t underestimate.

Read More
14Jun
Business owners: Put your successor in a position to succeed
Business Ownership

 

When it comes time to transition your role as business owner to someone else, you’ll face many changes. One of them is becoming a mentor. As such, you’ll have to communicate clearly, show some patience and have a clear conception of what you want to accomplish before stepping down. Here are some tips on putting your successor in a position to succeed.

Key information

Find ways to continuously pass on your knowledge. Too often, vital business knowledge is lost when leadership or ownership changes — causing a difficult and chaotic transition for the successor. Although you can impart a great deal of expertise by mentoring your replacement, you need to do more. For instance, create procedures for you and other executives to share your wisdom.

Begin by documenting your business systems, processes and methods through a secure online employee information portal, which provides links to company databases. You also could set up a training program around core business methods and practices — workers could attend classes or complete computer-based courses. Then, you can create an annual benchmarking report of key activities and results for internal use.

Read More
12Jun
Consider the tax consequences before making an employee a partner
Business Ownership

 

In today’s competitive environment, offering employees an equity interest in your business can be a powerful tool for attracting, retaining and motivating quality talent. If your business is organized as a partnership, however, there are some tax traps you should watch out for. Once an employee becomes a partner, you generally can no longer treat him or her as an employee for tax and benefits purposes, which has significant tax implications.

Read More
26Jan
Succession planning and estate planning must go hand in hand
Business Ownership

 

As the saying goes, nothing lasts forever — and that goes for most companies. Then again, with the right succession plan in place, you can do your part to ensure your business continues down a path of success for at least another generation. From there, it will be your successor’s job to propel it further into perpetuity.

Some business owners make the mistake of largely ignoring succession planning under the assumption that it’s taken care of within their estate plans. Others create a succession plan but fail to adequately integrate it into their estate plan. To avoid these mistakes, it’s important to recognize the difference between succession planning and estate planning.

Read More
07Nov
Mentoring can make your succession plan better
Business Ownership

 

The owners of many companies launch their enterprises with a business plan — a written document outlining the company’s strategic objectives and practical means of accomplishing them. Likewise, many owners leave their businesses via a succession plan, a written document outlining how the company’s ownership will transition.

Often, however, these two documents never cross paths, much less join toward a common goal. If this is the case with your business, and you’ve already identified your likely successor, mentoring can make your succession plan better by uniting it with your business plan.

Read More
11Aug
Cultivating your company’s strategic plan
Business Ownership

 

Most companies start life as a business plan. Eventually, that plan should evolve into a formal strategic plan document that lays out key initiatives for the business over the next three to five years.

Unfortunately, even when said document is created, that seed planted in the ground often ends up largely ignored, untended and malnourished. So how can you make sure to cultivate your strategic plan so it grows with the company? Here are some ideas.

Read More
28Jul
Business owners: Put your successor to work before you set sail
Business Ownership

 

A hastily chosen or ill-prepared successor can lead a company astray or, in worst cases, mismanage it into bankruptcy. Before you set sail into retirement or perhaps on to your next great professional adventure, make absolutely sure that your chosen replacement is ready to, well, succeed.

Build stakeholder confidence

Perhaps the simplest, most important thing you can do is to put your successor to work. Co-owners, board members and employees are more apt to follow a replacement’s lead if they feel confident in his or her knowledge and skills. And the only way to truly build that confidence is to allow these stakeholders to experience your successor’s leadership style and capabilities first-hand.

For instance, let your successor gain experience examining and discussing financial information for tax and financial reporting compliance and profitability analysis. In addition, allow him or her to spend time among your HR staff to learn about your hiring methods and benefits issues.

Read More