Business owners frequently ask us whether this is a good time to begin transition planning. Especially in uncertain times, we hear this question a lot. (I wrote about Planning a Business Transition During a Recession in April of 2023.) Owners are naturally concerned about transitioning their companies to family members, business partners, or employees in a time of economic uncertainty. While they are confident in their own ability to steer their companies through tough times, they worry about whether their successors are up to the difficult task and certainly don’t want to set them up to fail.
The Journey Ahead
If you are trying to choose the best time to set off on your business transition journey, you’re not alone. Before they begin transition planning, many owners struggle with a long list of timing issues. To name just a few:
- When will you approach a successor?
- When will you begin training that person to do what you do?
- When will you begin to transfer equity?
- When will you complete the transfer of equity?
- When will you announce your transition plan to other employees?
- When will you feel comfortable leaving your company for the next phase of your life (your Next Adventure™)?
We call these (and more questions like them) “Whens.”
Choosing Your Whens
To choose your first When—the specific date on which you will begin your transition journey—we suggest that you make assessments about your successor’s capabilities, the degree of your company’s dependence on you (and you on it), the ability of your company to generate the cash flow necessary to pay you what you want for your company and, of course, your own readiness.
To help you envision the timing for your unique business transition journey, we’ve developed a list of questions. Please click here to access it.
Assessing Your Readiness
Some owners base their desire to begin their transition on an event. Perhaps they have (or their successor has) reached a certain age, or their company has reached a significant milestone. Some owners are tired of the day-to-day responsibilities of running a successful company while others are eager to begin their Next Adventures. I’ve written about eight of the most common reasons owners begin their transition journeys here.
Is today a good time to begin transition planning?
Only you can determine whether this is a good time for you to begin transition planning. From long experience, however, we can tell you that the more time you give yourself to plan the more options you have when your transition journey requires (and, at some point, all do) a course correction or adjustment.
Transitioning your business to a new owner is a long and exciting journey that starts long before you hit the road. Creating a thoughtful and thorough succession plan is the first step – a step that you can take today.
