Business success and succession are dependent upon financial success. Therefore, before succession can occur, your business must first achieve and maintain a high level of performance.
Due to the challenges associated with management and ownership transition, there is generally a predictable drop in profits. For that reason, a constant review of business performance metrics is critical to generate sufficient profits before the time of transition to fulfill reasonable cash flow needs and expectations through the next generation.
Evaluating the performance of your business involves more than just looking at money and profits. Other critical areas that should be considered include looking at where your business stands compared to your competitors, ensuring that your company and employees are working as effectively and efficiently as possible, and how your business is prepared for the future with respect to technology advances, market changes, contracting margins and more demanding customers.