Let me set the stage. Your business is prosperous and you cannot believe how well your company is growing and progressing. Sometimes, all the extra hours and hard work actually pays off. What, you ask? Don’t get me wrong, it is not perfect, because no business has perfection. There is always a way to improve and grow, and there are always growing pains. You always need to be improving your business strategy.
Welcome to business 101. This is life.
However, along with a growing business comes stress. Say, for instance, you are suddenly diagnosed with a terrible health condition. Are you ready to pass your business down to the next generation? Have you set the stage for your business to survive, or will it falter because you failed to do any legacy planning? It’s time to learn what you need to do before you retire, or, God forbid, you develop an illness or become incapacitated by some other means.
6 Steps to Manage Transitioning Your Business for the Next Generation
- Have a plan in place for your retirement or tragedy. No matter what, at some point you will stop working and have to hand your business over to someone else to run or get it ready to sell. But this business has been your livelihood for most of your life, so how do you prepare for the next step? You need to get a plan together that makes transitioning your business as smooth as possible. This includes:
- Valuing your business. You need to have the value of your business to determine how to divide ownership. This is a good time to have a third party establish the value and put it in a written document. Then it is clear what the value of the business is and how you can divide the assets.
- Setting future cash flow. How the heck do you forecast? It’s just like running your business, right? This helps to allow the next owner to accumulate the assets to be able to buy the company. You need to keep your business healthy and the next generation can take over in a slow and controlled process.
- Establishing hierarchy. At some point you have to establish who will run the business and you want your next leader to be respected as the new leader of the company. How can you do this? Over time, you need to make sure this new leader is educated and prepared to run the business. You want and need your employees and customers to trust him or her.
- Develop a plan to train the next generation so they are ready. The bottom line is training the next generation and educating them to be ready for the transition. This may involve having multiple experts to establish all systems and communication to keep your business running smoothly.
- Have a management plan in place for family members with expectations for them and employees. Establish a management plan right away so that the transition is not sudden, but expected and all elements are in place so your clients and employees trust the new ownership plan and the business can continue to function as normal.
- Preparation helps you avoid the entitlement issue. If you prepare, you will have minimal issues with your transition. Nothing is ever perfect, and people love drama in the workplace. The more you prepare, the more you can eliminate the drama and chaos. Preparation leads to success and avoids employees or customers thinking your next leader got the job by default or entitlement by birth.
- Establish a mentor or coach to help the younger generation transition. As you prepare to transition your business, a mentoring coach in the business can help establish their credibility and help them fully see how the whole business operates. Keeping all the cards on the table and mentoring your next business owner helps eliminate the conflict and entitlement some of your employees or clients might consider.
- Have your professional team set up for an easier transition. Time to get your financial planner, estate planner and any other resources to establish all the legal documents so the business can continue to grow. You need all the documents in place.
- Define the values and mission of the business for the future generation. As Shakespeare once said, “No legacy is so rich as honesty.” Be true to the mission of your business and make sure you pass that value down to the next generation so the business thrives.
So are you ready to establish your transition plan? Hopefully this helps you get your business strategy in line to allow your company to go to the next generation. However, no business can do this without a solid marketing plan to carry the business forward. You need a partner to help you marry your sales and marketing in order to keep the value of your business up.
Want a partner to make your transition easier? We can help you with your inbound marketing strategy to retain your business value and help your sales team move forward with online sales and marketing. Give Marketing Essentials a call today at 419.629.0080 and talk to one of our business strategists!
