First Steps in Business Succession Plan
I like this action plan/checklist provided by Marketing Plan Online titled A Strategically Structured Outline for Business Succession Planning. If the length of this checklist is intimidating, you could start with Five Key Steps to A Successful Business Succession Plan but I think there's more benefit in the thorough approach that ties together all the important aspects from identifying and grooming a successor to structuring the business for maximum value and continuing to tying it all together with an effective estate plan. The first two steps can themselves create confusion. The first is to develop a vision statement for your business and the second is develop a mission statement for your business. When I work with business owners and nonprofit boards I find that they are sometimes confused by the difference between these two statements. Don Hofstrand at Iowa State has a good delineation on the difference between a mission statement and a vision statement. When I work with business owners or groups, I try to explain them with the distinction that while both a mission and vision are designed to move you forward, the mission is what pushes you and the vision is what pulls you. Your company's vision statement should describe the end result, what you are moving toward. A mission statement should be WHY your business exists and describe your business purpose. The vision statement should be WHAT you want your business or target community to be in its ideal form.
A legacy law firm's mission statement might be: "To provide guidance and assistance to individuals and business owners who want to leave a lasting legacy." The same firm may express its vision as: "Professional advisors who listen to and share with clients to provide effective advice and implementation in all forms of legacy planning." Or the vision statement could go beyond the business to be: "A society which recognizes that we all leave legacies and encourages intentional efforts to make those legacies positive." I like our mission statement much more than our vision statement but both are works in progress.
When a business can articulate its mission and vision it is more likely to be able to successfully continue both into the future. The least successful business transitions I have seen are those where the new business owner immediately destroys the flavor and character of the business he just took over. I wasn't surprised when the buyer of a Chinese restaurant failed within a year because a week after buying the business he removed all the Chinese dishes and made it into a deli. Now maybe a deli is what the market really needed, but that owner had just paid a great deal of money to buy an existing business and then destroyed all the good will and name recognition that went with the business.
Crafting mission and vision statements can be really fun and is almost always an ongoing process. However, it won't be enough to successfully exit a business. You'll need to plan the exit strategy, business structure and tax consequences as much in advance as possible. That's where effective legal services come in. Exiting your business has a profound effect on the legacy you leave your family, your employees, your customers and your community. That's why I consider business succession planning to be a key component to legacy planning and why I like that aspect of my work so much.
Whether you dive right into the more thorough outline of steps or start with something more simple, just realize that there is more to a business succession plan than a buy/sell agreement that you and your partners put in a drawer and never review (or worse, never sign).
Posted by Karen Brady at 4/6/2010 7:26 AM 
Categories: business succession, business planning
Tags: exit planning vision statement business planning buy sell agreement business exit estate planning mission statement Colorado attorney business succession
Categories: business succession, business planning
Tags: exit planning vision statement business planning buy sell agreement business exit estate planning mission statement Colorado attorney business succession
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