Today is the day you’ve been dreaming of: opening your own business or buying your existing one. That’s the day you start planning your business.
“Most small business owners don’t. They don’t think about it,” says Earl Gregorich, area manager and senior business consultant for the Greenville Area Small Business Development Center. “It’s important to start with the end goal in mind.”
“If you don’t have Uncle Sam, he has a replacement plan for you. They include property fees, taxes and goodies. They will eat everything you have built and not much will be left. – Earl Gregorich
That said, all good things come to an end, but what does that end look like?
“My point is, right from the beginning you have to have some idea of what it’s going to be like, what it’s going to be like going out,” Grigorich said.
Those exits include leaving your company to your children, offering an employee buyout, or simply walking away and closing your doors — or if you own, say, Patagonia, handing over your $3 billion company, as Yvon Chouinard did last year.
“I think once they feel they understand the business is profitable, if they can grow and have their feet on the ground, they need to start planning for young people as well,” said Joe Musuraka, a certified consultant in Greenville. Piedmont SCORE, Service Group for Retired Executives. “The operative word is creating transferable value.”
Alan Cordonier, a one-time stockbroker, bought St. Francis Pet Services and Mortuary 20 years ago. The Greenville company, which opened in 1990, offers pet cremation services. When Cordonier came in, the business was losing $100,000 a year, he said. Eighteen years later, the company was serving more than 100 veterinary clinics, according to Funeralfide.com.
“I think that once they feel that their business is profitable, that they can grow and that they have their feet on the ground, they should start planning for young people as well. – Joe Musuraka
But four years ago, he was approached by two companies to buy the business he had worked for for 18 years.
“Our name was exactly what this company wanted: to treat our customers right and clearly provide the service they needed at a reasonable price,” he said.
The Canadian company also offered a reasonable price: in the mid-seven figures, he says.
But what if something happens to him before then?
According to Gregorich: “If you don’t have Uncle Sam, he has a replacement plan for you.” They include property fees, taxes and goodies. They will eat everything you have built and not much will be left.
Top 5 Tips for Succession Planning:
- Start early – revise often
The sooner you have a specific succession plan in place, the easier it will be to run the business in a way that achieves the ultimate goal. Succession planning must be flexible as the company, the industry, and the job market change over time. - Aligning succession planning with short and long term planning.
Succession planning should be considered in all planning efforts. You don’t want action goals to be the opposite of a streak, and you want your accomplishments to consistently move you closer to a succession trigger. - Consider the skills gap
Success can only be achieved if you develop the right people with the right skills to move into critical positions within a company. Everything done in business must be reduced to basic processes that can be replicated and transferred to the successor. More importantly, as an owner, you must know when to step out of the way and let someone more capable take over. - Understand the timeline and its relationship to strategy
If done right, success will last for years, not weeks. Business strategies that work for startups or growth may not present the business in the best light for sales or employee acquisition. You need to plan ahead and be strategic about how to look at the break-even point of business finance. - Prepare for disaster
We all know about “the best laid plans…” The best laid plans can be ineffective during an untimely death, loss of key personnel, or perhaps even a pandemic. Owners should use succession planning tools such as key-person insurance, employee stock ownership plans, partnership agreements, and other legal arrangements so that even in the event of a disaster, succession can continue smoothly.
Source: Earl Gregorich
Local manager and business consultant
Greenville Area Small Business Development Center, in partnership with Clemson University
