Recently I was invited to speak to a group of successful business owners about the various aspects of succession planning (what I refer to as the Succession Matrix). The Succession Matrix consists of ten interdependent factors that business owners must successfully address to improve the odds that their business will successfully make the transition to and through the next generation of owners and managers. Addressing these factors is important regardless of whether you plan to sell your business or plan to keep it in the family. Often times these critical factors are ignored and unfortunately result in the business becoming another casualty.

Prior to the workshop beginning, the moderator asked each of the business owners to give me a brief introduction of themselves, their company and to rate their preparedness for succession on a scale from 1 to 10. Not surprisingly, the majority of the group rated themselves highly and believed their succession plans were all but complete. This is natural as many business owners believe succession planning consists of implementing wills, trusts, buy sell agreements and life insurance.  After the introductions were finished, we spent the next few hours engaged in interactive discussion about issues such as exit strategy, selecting a successor, how to prepare a successor and other topics of interest to the group.

Towards the end of the workshop, the moderator asked each participant to share with the group something they learned and planned to take home to implement. One gentleman in the group spoke up and acknowledged he had an “ah ha” moment. He commented, “I sold my primary business and thought I was done with succession planning. Today has helped me understand I have simply swapped my business for cash. It is now my responsibility to develop a plan for my family, communicate that plan with my family and determine how we will continue to be good stewards of the after tax proceeds and other business interests I am involved in.” 

While the sale of your business is a viable succession option, it does not remove the need to continue planning. It simply presents new opportunities and challenges. The next chapter in your life is about to begin. Following the sale of your company, you will undoubtedly be approached by family members or people in the community to invest some of your liquid assets in a new business venture or perhaps you will get the itch to start a new business yourself. It is important to stay on track by ensuring your planning is consistent with your goals and objectives so your succession train isn’t derailed. Whether you like it or not, “The train rolls on!”

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