When business owners start thinking about succession, one of the first questions they often ask is, “What are my options?”
It’s a reasonable question. But it may not be the best place to start.
There are many ways to transition a privately held business. You might sell to an outside buyer. You might transfer ownership to family members, management, or employees. You may consider some form of employee ownership or another structure altogether.
Having choices is good. Having too many choices can quickly become overwhelming.
The better question is:
What do you actually want your business succession to accomplish?
Start With the Outcome, Not the Transaction
After spending more than 40 years working with owners of privately held businesses, I’ve learned that succession is rarely just a business transaction.
There is usually much more behind it.
Perhaps you want financial security for yourself and your family. Maybe preserving the business you spent decades building matters deeply to you. You may want certain employees to have a future with the company. You might want to step away completely or remain involved, just without carrying the same responsibilities you do today.
These are very different desired outcomes, and they can point toward very different succession paths.
That is why I believe the first step should be determining what you actually want.
Once the destination becomes clearer, it becomes much easier to evaluate the different ways of getting there.
Not Every Option Is a Realistic Option
This is where succession planning can become uncomfortable but also much more useful.
You may like a particular succession path, but that does not necessarily mean it fits your business.
The realities of the company matter.
How strong is the business financially? How dependent is it on you personally? Do you have employees or managers capable of taking on greater responsibility? What is the business worth? What resources would a potential successor need? And what compromises might you have to make to achieve the outcome you want?
A good succession process needs to look at these questions clearly.
The objective isn’t to find a perfect option. In most situations, there isn’t one.
It is to identify the options that are realistic, understand the trade-offs involved, and decide which path gives you the best chance of achieving the outcome that matters most to you.
Succession Is Personal
Two owners with very similar businesses can make completely different succession decisions and both can be right.
One may want to maximize the amount received from the business. Another may place greater importance on preserving the company or protecting employees. Someone else may want greater freedom now while gradually transitioning ownership over several years.
That’s why I don’t believe succession planning should begin with a predetermined solution.
It should begin with the owner.
What do you want your life to look like after succession? What do you need financially? What do you want to preserve? What are you prepared to give up? And what role, if any, do you want to have in the business going forward?
Those answers provide direction.
From Too Many Options to a Clear Path
Thinking about succession for years without taking action is surprisingly easy.
There is always another issue demanding your attention when you own a business. Succession can remain something you’ll deal with “later,” particularly when you aren’t sure where to begin.
The goal doesn’t need to be having every answer today.
The goal is to move from considering succession to having a realistic direction and then begin taking action.
Start by defining the outcome you want. Look honestly at the realities of your business. Narrow the available options to those that can genuinely work. Understand the trade-offs. Then build your plan around the path that best brings those pieces together.
Succession becomes much less overwhelming when you stop trying to choose from every possible path and start focusing on the ones that can actually take you where you want to go.
Not sure which succession path fits your goals and your business?
A focused conversation can help you clarify your desired outcome and identify the options worth exploring.
Book a Consultation now
A focused conversation can help you clarify your desired outcome and identify the options worth exploring.