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Does Succession Need to be So Complicated?

19/05/2016


Short answer? Probably not, but it mostly depends on how you are approaching it. If you are looking for a quick-fix, simple solution when a comprehensive plan is required, the complexity of fixing problems will far exceed that of proper planning.

I think there is a much misunderstood phenomenon which has a large impact on how many business owners approach these situations. If you are the owner and top dog in the company and have been there for a while, you will have a solid understanding of the inside out of your business. You are able to look at information presented to you and based on your experience and highly developed instinct, make good business decisions. In many cases, the decisions can be made and execution started immediately. You can mobilize resources, set priorities, make people change what and how they do things and trusting your position of leadership, they abide with your will.

Succession on the other hand, can be substantially different. It can take years to unfold, may involve many aspects that you have never encountered before and require inputs from people you may not have even met yet. In short, succession may become a more involved process than any other large decision you have made before. It will involve family members who, for the most part may have had little or no involvement in the business. All of a sudden, the number of people that have to be involved and considered, can expand to a point where you feel it is almost too difficult to handle.

Ask any good general why a battle plan is so important. Imagine how many Allied forces landed on the beaches of Normandy with no computer processing capabilities available. The planners had to consider so many factors, document so many plans and still maintain a resiliency and flexibility in their approach to ensure success. Succession may require a similar attitude. Consider the following pieces of advice to make the process as smooth as possible:

  • Feel free to bring in someone to help you navigate this process.
  • Surround yourself with one or two key people willing to ask you the straight questions.
  • Consider the consequences of the steps you have to take.
  • Consider the consequences of the consequences of steps you have to take. Take it just that one step further into areas such as financial matters, and key relationships. If you are unsure, ask the professionals around you. If they cannot help you, secure access to people who can as soon as possible.

Once the planning is done properly, once the consequences and the ripple effects of consequences, good and bad, have been considered, the initial complexity will look far more manageable. Change will be less daunting and unlikely to catch you by surprise. You will be able to relax and focus your attention on maintaining a good business, which is what you do best.

For more information as to how you can successfully transition out of your business, contact Eben Louw, CPA, CA at 604.870.7413 or [email protected].