Why Business Succession Planning Is Like Exercising

It’s hard to find someone who doesn’t agree that regular movement helps build a healthy body. If that’s the case, why do so many people skip the gym?

The answer lies in the part of our brain that knows something is beneficial, but because there aren’t immediate – or noticeable – impacts in the short term, we put it off or avoid it completely. This principle also applies to business, particularly when an owner considers selling his or her company.

I’m passionate about this topic because I care about helping business owners think through their succession planning and the next stages of their businesses. In my experience, the sooner owners begin planning for next steps, the better chance the company will flourish after the transition.

Just like exercise, it’s important to have a plan before the “go-live” date. When training for a marathon, a skilled runner creates a detailed plan, including increasing mileage, varying distances, and, depending on the complexities of the racer’s goals, perhaps hiring a coach to guide the way.

While many business owners don’t have a coach on standby to help with the succession-planning process, there are a few general considerations to maintain your business’ financial fitness:

• Identify your “people.” A succession plan must include a successor. If you don’t have an obvious first choice, consider selecting a team that can assume a small, and possibly increasing, stake in the business. While this can serve as a method of identifying strong potentials, it also gives you an opportunity to see if there are any additional personnel changes that should be made. While the answer is different in every scenario, think through how one personnel decision may alter other parts of the business. If a role needs to be filled, it is less expensive and more time efficient to promote someone from within the company who already understands the business than hiring a recruiting firm and training a new employee.

• Prepare your employees. One of the best ways to ensure that your business has a smooth transition is to communicate effectively with your team. This helps ensure your employees will have an easier time during the transition and maintains their confidence for the future. This outlook also encourages employees to remain as committed to the succession plan as you are. Akin this tactic to sharing your exercise goals with your friends and family – the more people who are in the loop, the better they can support your vision.

• Consider outside help. Your business represents a lifetime of hard work and commitment, so it can be difficult to make impartial decisions. Whether you inherited the business or built it from scratch, you may want to consider seeking outside help to learn more about succession strategies. To fully understand the best options for you and your company, be sure to closely consult with your legal and tax advisors about your circumstances and planning. Also consider taking the time to meet with a team from your bank to learn about your financing and investing options.

Ultimately, it’s important to avoid getting stuck in the exercise-analogy trap of knowing something is good for your future, but avoiding it all together. Do the hard thing and get started today. Just like training for a marathon, it starts with the first step.