Business 102: Clarifying Goals and Succession Planning
Congratulations; you’ve launched your company and after nurturing your vision, setting your goals, and marketing your product, your business is in the black. Obviously, you’re doing something right!
Sometimes business financing helps to put priorities in order - just by virtue of needing to present well on paper. Of course, the more solid your profit, the better your borrowing terms and rates will be. If you’ve felt that cause & effect gain momentum, you’ve learned how to balance effort with cost management. Over time the cost of doing business actually lessens through growth. The inherent formula boils down to, “The more my company is worth, the more banks will offer.” Once exhilarated, you may lose track of an essential cornerstone of wealth management: succession planning.
Unlike collateral, insurance, and appraised values, lenders aren’t invested in your legacy. That’s a creative investment that requires vision, planning, and structure. The organization of your longterm goals complements your working business model. At its best, succession planning sustains your success after you’ve stepped away from the company helm and keeps the ship strong at sea.
In the same vein as a personal will, there’s a hesitance to imagine being anywhere but vital to the charted course. Of course, no one lives forever and even in the most fruitful of lifespans, we pass the torch. The larger your business is, the greater the impact of your absence. Taking a broad brushstroke to the canvas, consider what your business offers after you’re gone:
Does the business continue, is it sold, or is it simply closed?
If continuing, have you groomed a replacement to lead the company?
If closing, is there a transition into an inheritance distribution?
Are institutions or individuals named as beneficiaries?
Have you clearly and legally secured your intentions for the future of your wealth?
Granted, these are early and basic considerations for fiscal conservation.The intention is to recognize the chasm between initial success and the growth toward your envisioned future. If you’ve grown into tiers of corporate structure, you’ve undoubtedly encountered the quest for future management. However, many successful small businesses never see tiers of management. Succession planning involves merging the generation of profit with the values you embrace personally. You’re the boss, the lead, and the master of creative direction. As such you have the power to decide how to bestow, perpetuate, restrict, or parcel the fruits of your success. We often anticipate a dollar amount when thinking value; consider instead the idea that an archive of uniquely crafted artisan work requires an equally unique succession strategy.
There’s always an inner formula to a business methodology. Among other factors in that formula, a certain percentage is purely numeric; how much spent for how much generated? Another portion is personal reward; is the nature of the working experience as important as the amount of money generated? Additionally, are personal values such as environment, targeted employment, or social service conscious factors in the estimated worth of your business?
More than any other part of longterm management, succession planning reflects your values. Looking at your vision and your current status from a distance, project where you’d like to see the business along a timeline. Allow your succession plan to adapt and serve your vision as market trends, time, and economy affect your business’s measurable worth.
There’s a familiar saying that, “If you really want to punish someone, make them executor of your estate”. To avoid that potential pitfall, you’ll need to prioritize organization. Assure that your plan is viable, readily understood, and legally documented. Secondly, you’ll need capable personalities that understand your economic values along with the capacity to honor them. No business benefits from trying to fit that proverbial square peg into a round hole; your successor(s) need to be eager, committed, and capable of transitioning your fiscal ship into the journey-bound voyage you’ve mapped out.
This is the starting place for your legacy. It can easily fall to dust or dispute if you fail to nurture an intended vision. If you’ve mapped a course without family or staff, explore the institutions that you’d like to see supported moving forward. It’s never too early to explore what magic your efforts may perpetuate beyond your own steerage.