Business Succession Planning
Succession planning in this context is about clients looking to build businesses that can operate without their personal involvement. Once your business can operate without you then you can look at sale options and valuations.
Imagine you are away from your business for 1 day, there will be no direct impact. What about a week? Or 2 months? 26% of UK businesses would fail if a key individual died or left (Legal & General State of the Nation’s SMEs Report). Therefore, these businesses are almost worthless because they do not exist without that individual(s).
Clients will often engage with us because they are spending too much time working in their business, the idea of creating a succession plan or pursuing a sale is a distant dream. We help them step away from the daily activity and start spending time working on their business; this means focussing attention on activities that will increase future value.
For clients exposed to key person risk, the first step is often addressing the structure and functionality of their business – the subject is covered in more detail here (www.catandra.co.uk/functionality/). A functional business has the right people, with the right skills, doing the right jobs. In the case of your business this means analysing the entire operation and creating a structure that is not reliant on you.
When a client has time to step away from their business the succession plan begins to take shape; this plan can include:
- Training and developing the current team
- Recruiting new management
- Functionality project to align roles and responsibilities with business vision
- Management systems to help control business operations
For example, many owner managers still insist on signing off expenses and managing relationships with big clients. There are two immediate issues; signing off expenses is not a job for a director, there should be processes to manage it. If the directors hold all the key relationships then there is no client goodwill in the business, this means you will struggle to sell in the future because cashflow is uncertain.
Our fastest growing clients build on a foundation of communication systems.
If you want to improve your team dynamics and decision making then it could work for you.