At some point we'd all like to retire - and when we do, it's good to know that someone will be there to keep the flame burning brightly for your business. A few weeks ago, Warren Buffet made news by announcing that he had picked his successor, to lead the Berkshire Hathaway empire he worked to build over his lifetime.
It's safe to assume that his decision was a difficult one, and that he likely spent a significant amount of time and energy planning for his decision. Although we may never have the responsibility of handing over a $100 billion portfolio as Warren does, as a small business owner - you likely view your company as your greatest asset, and (like any asset) should start to develop a long-term strategy as soon as possible.
Are Canadian business owners planning for succession?
According to a recent report put out by the Canadian Federation of Independent Business (CFIB):
"Only 10 per cent of SME owners have a formal plan to sell, transfer or wind down their business in the future, while 38 per cent of owners have an informal, unwritten plan (see Figure 2). More than half (52 per cent) of SMEs do not have a succession plan. The earlier that an owner expects to exit the business, the more likely it is that the owner will have a succession plan."
Taking the time to plan for the future of your business - how and by whom your business will be run after your departure is an important step to make. For many business owners, the sale of a business may mean early retirement - or at least a rewarding payout for years of hard work. Other owners prefer to pass operations to younger members of their families, to preserve the family legacy (see: What to do when your kids don't want the business).
With this in mind - start by checking out the full report 'Investing in your future: Building a succession plan' by CFIB. This free online document (PDF- 56 pages) is a great resource for anyone trying to get started with a succession plan, or even just to keep on hand for future needs. If you're looking for even more in-depth information, several books have been written on the topic of business succession. Here's one that has a Canadian focus to get you started:
Butler, L. (2009). Succession planning kit for Canadian business. North Vancouver, B.C: Self-Counsel Press.
PHOTO CREDIT: Photo Light at the End of the Tunnel Under the A1M1 Link created by St Stev on Dec 16, 2005, available under a Creative Commons Attribution license. Last viewed on Nov 9, 2010.