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The right successor for business owner

As an entrepreneur you invested your hole power over decades in building up your own company. This cost money, physical as psychical strength and as studies show long working days. Not seldom working over 80 or 100 hours a week.  
No when your Business is earning the return which you targeted, it is time to think about the future. I know it is not every ones loved topic and of course not the best time when you came just on the point at which all your work is paying out. But believe me, better the set-up of an emergency plan as also your plan of succession is made today then to late.  
 
Any to late set-up could cost a fortune in form of taxes or could put your life-time work at risk. A tax authority might come to the conclusion that your firm represents a value of 500,000 instead of your value with maybe 300,000.  
If you wish that a Family member should take over, this person has to be trained first or you want to take that person first for a time under your wings. There could be many reasons to start with your succession planing right now, sometimes it will take simply some time to get your wishes in position.  
 

Getting started  

Actually it is not as difficult as you might think, we will start simple. With your wishes and your expectations. How do you would like that your business goes on when you retire? Should take over one of your children or some other family member? Do they know your wish and do they want to run your business?  
First and most important part of your succession plan will be the part of how you would like to have it done. One first decision should be should be your business going on, do you want to sell it or do you want to close it? That is crucial and this decision must be made by you. It is your business, so you have to make that decision and you have the choice.  
 
Bottom line will be this three options first, so far it is not important who will take over and follow in your footsteps. This is one reason why it is essential to start as soon as possible with the succession planning, because you will have time to set it up as you wish and not what the time dictates.  
As the title of this article is the right Successor, we will continue with this perspective in the following. The first and most important decision is made. It will be the most important, because you started with it your succession plan.  
 
Next graphic will provide an overview of essentials when discussing the right successor.  

 
 

Skills,          

any successor should bring already the necessary skill-set with him or her. Meaning we will give only our firm into hands which have done already some work. With this is meant social  skills, leadership, conflict solving, success, whatever you will require more.  
The skills we will gather maybe best if we will write a profile for the vacancy manager of your business.  
 

Experience,   

of course to be set in your chair we will want only the best experienced manager which will be to found. But what is to be understood under experience. The best suitable candidate would be one which knows your sector, understands your products or services. Maybe someone from the basis, which went the carrier ladder through several stages up. 
A manager which brings also some experience from outside your company with him or her.  
 

Trust,   

it has to be lady or man which is trustworthy. The right grounds have to sparkle from the first handshake between each other, the first impression has to be a great one. This first impression has to be transformed over time into trust and in the essence to be proven. 
At this point it will become once more crystal clear that succession planning requires time.   
Trust will be earned over time.  
 

Acceptance,  

to be accepted means that the senior entrepreneur from which will be taken over, has to accept his / her successor. That has to been shown also by giving step by step power to the future entrepreneur. Under this point has to be seen also acceptance from your employees, business partners, deliverer, bankers and especially your family. Actually from everyone which is important to your firm has to accept your successor.  Good news are that this is no question of black and withe or yes or no, acceptance can be earned also when in the beginning exists dislikement. Again time is and will be a mature asset.  
 

Plans,   

for sure one of your question to any possible successor will be, what his plans with your company will be. Where do you see my firm under your leadership in tomorrow, in five and in ten years. So or otherwise will be this question. Carful at this point, it is your firm until now but in future not more.   
Being open for new ideas and perspectives will be a great choice in choosing and assessing your future successor.  
 

Family,   

under the point acceptance we had your family already involved. The acceptance of your successor by your closest family members are optional but not necessary and crucial. I would recommend if your family goes along with your decision, this would keep future processes simpler.   
To raise the chances to the best outcome, the family should be on board as soon as possible. A good timing could be before the decision of countenance, sale or closing of your firm will be made. Also when the decision lays in your hands, this will give everyone a feeling of involvement. This involvement of everyone could be a factor which keeps the peace later and will be one to bring everyone on board when your succession plan is ready for enforcement. Everyone, especially your spouse and children (your heirs), has to understand your ideas behind your succession. Their agreement would be great, but it is not mandatory.  
 

Solvency,   

last but not least will be about money. Solvency is from different aspects important. Your potential successor should have suitable funds to pay the potential price for your business. Or should have a secured way to finance the price. Obviously this will be important for you to be sure that you are getting the agreed price for your life work. Secondly as higher the credits are weighting on the new entrepreneur as heavier it will pressure also on your business, because it has to bring enough return to pay the instalments.  
 
The order of the points above have not to be understood as any form of prioritisation. Also it is not a finished list, but it is providing a taste for what the right successor should have.


This post first appeared on Finance-Legal-Blog, please read the originial post: here

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