Good to Great: How to Scale With an Outsourced CFO

What will happen to your business when you no longer stand at the helm? The end of your tenure may occur for several different reasons, whether it’s pursuing new opportunities, facing sickness or disability, or retiring and spending your time travelling.

Whatever your reason for pulling up stumps, a business succession strategy gives you a far better chance of a smooth and financially effective transition of ownership.

In this blog post, we’ll look at some of the important questions to ask yourself as you develop your business succession strategy.

 

What is a Business Succession Strategy?

In simple terms, a business succession strategy is a business owner’s exit plan. When it’s well-constructed and executed, a business succession strategy facilitates a smooth departure from the business and can help business owners to achieve their financial goals, both for their businesses and for themselves personally. 

Because you never know what life has in store for you, it’s wise to start working on your business succession strategy many years before you plan on actually making your exit. This is helpful for several reasons.

First, you never know if illness or death will interfere with your life’s plans. Second, it may take many years to effectively execute your plan, especially if your plan involves training up your successor.

 

Why is it Important to Have a Business Succession Strategy?

Some of the reasons for having a business succession strategy are obvious. For example, you don’t want to leave your business leaderless or without guidance if something should happen to you.

 

 

Other reasons are less obvious. For instance, a well-constructed business succession strategy can actually help your business to run more effectively today. It helps key stakeholders to understand how business assets are owned and controlled, and when this information is clearly laid out, your business may have more flexibility for ownership and the changes that result from growth and expansion.

Succession plans are also important in securing your own future as well as the futures of those who depend on you. Having a plan for selling your business or providing for your retirement will bring you peace of mind and security for your future.

 

What Are the Key Elements of a Succession Strategy?

As you approach business succession planning, keep in mind that a comprehensive plan should include the following key elements: 

• A successor
• Succession type (full or partial)
• Timeframes and timelines
• Personnel changes, including hirings and retentions
• Restrictions
• Legal considerations
• Risk management
• Retirement considerations
• Valuation and buy/sell agreement information
• Communication of the strategy to key stakeholders 

Without a strategy that includes all of these elements, your succession may be subject to too much risk.

 

Should I Use an Adviser to Clarify My Business Succession Goals and to Future-Proof My Business?

Even if you’re familiar with business succession and all that it implies, it can be extremely helpful to use an adviser to clarify your business succession goals and to future-proof your business. Business owners are so thoroughly integrated into the daily operations of their businesses and the history behind the operation that it can be difficult to take a long-term view. 

An adviser can also help you to work out the logistics and to consider legal, financial and tax implications that may have changed in recent years. 

Many people are surprised at how long business succession can take, so don’t delay this important part of your business responsibilities. Get some help with your succession strategy by contacting us at Altus Financial. We can help you to construct your strategy and begin to put all the pieces in place.