Succession planning is a complex process that involves multiple players, each with their own goals and priorities. In order to successfully navigate this process, it is important to have a quarterback who can coordinate and communicate with all the players involved.
Let’s look at a few of the players and their area of focus or interest.
The insurance agent is typically focused on minimizing risk and will likely advocate for more insurance coverage to protect the retiring shareholders and the new leaders.
The banker is looking for security and will want reassurance that everyone involved is financially stable.
Although their plan may be complicated, the income tax advisor is often motivated by reducing estate taxes. They will likely present a strategy that may be difficult to understand and may not hold up under an audit, but they believe it is worth pursuing.
The lawyers involved in the process are responsible for ensuring that all legal requirements are met and will advise both the retiring and new shareholders to seek independent legal advice. They typically take a pessimistic view and their main goal is to protect their clients’ interests.
The investment advisor plays an important role in managing and investing the business owner’s life savings, with the aim of providing a comfortable retirement for both the owner and themselves.
The children involved in the business will have their own opinions and ideas, and even those who are not directly involved may still offer their advice.
Lastly, the spouse of the business owner wants a fair deal and hopes that the family remains united throughout the process. They have likely witnessed the challenges and successes of small business ownership, and are ready to move on.
Amidst all these players, the business owner must take charge and act as the quarterback of the succession plan. They should communicate their intentions clearly to each player, understanding that not everyone will be completely satisfied. Ultimately, the business owner built the business and gets to decide the direction of the succession plan.
Having a proactive accountant or lawyer can be helpful in quarterbacking the plan, but it is also possible for the business owner to quarterback the plan themselves. The key is to be as clear as possible in communicating intentions with each player, ensuring that everyone understands the desired outcome.
As a business advisor who has worked with various players in succession planning, I have seen firsthand the importance of having a quarterback to coordinate the process. By taking charge and clearly articulating your intentions, you can create a succession plan that works best for you while ensuring that all players adapt to the plan.
If you are ready to begin or continue the process of succession planning for your business and need advice or a quarterback, please reach out: paul@thebusinesstherapist.com
