I was asked by a successful business owner about what is succession and what does it entail?  He had heard from others plenty about the subject but to him, the reasons were quite fuzzy.  For him, however, he began to spend more time contemplating succession because he had a 10 year horizon until he wanted to exit the business.  The business and how it would continue beyond this 10 years had now become a priority.

A short timeframe is a common impetus and reason to begin succession.  A business owner will begin to address succession once the issue “hits the radar”.  As important as the day to day operations can be, which often is all consuming (in time and energy), the owner realized that his10 year horizon suddenly was a short term issue.

Succession must be considered on two fronts.

1. succession of management – are the right personnel in place to run the business in the owners’ absence?

2. succession of the ownership – are family members to remain as the owners of the company or are other alternatives, sale or management buyout, to be considered?

At least in this case, the business owner had plenty of time to undertake succession planning and implementation on both of these fronts.

Learn, think, apply!