By Mike Staton Succession planning is the hardest thing most CEO’s will ever do. There are no step-by-step instructions out there that will fit your specific situation and your specific company. Nobody can tell you, with any level of certainty, whom you should select and even where to find this person. That is exactly why, if you are reading this blog, it is not too early to start the planning process.
To begin, you must first look within yourself and determine what are your personal goals and where do you want to take your company/business. This process will help you determine your timeline to locate your successor. If the timeline is less than 5 years away, you are behind and may have to look both outside and inside your company and start the training right away. If you have given yourself more time, then the options become more diverse.
The decision tree can be very complex, especially with closely-held businesses. In a closely-held business, the issue of family comes to the forefront very early in the decision-making process. You must first decide if any of your family members want to take over the business, look at the age of the individuals and then answer the most difficult question you will ever have to answer in your life: “Is my son/daughter capable of running the business?” This question can often lead to the ultimate realization that you don’t have “family” that can buy the business from you and run it successfully. This answer will lead to a dramatically different path on determining a successor.
If your succession plan is to a family member, the training has probably been going on for a long time. It actually starts with your child watching you go to work every day, working late and seeing the rewards of that labor at the home front, types of vacations you take and the overall lifestyle you lead. They already have a sense of the effort it takes to be successful; they just don’t have two other key elements that it takes to be successful. The first needed element is the skill to run the business and the second is the money to buy you out so that you can ride off into the sunset. We have found that most business owners have the desire and passion to teach the necessary skills to a loved one. We can help you find the money and the method to getting to that big pay day you have been working toward for many years.
Alerding CPA Group, an Indianapolis-based public accounting firm, specializes in working with closely-held companies and is very experienced at dealing with succession plans that include family members, key employees and even outside sales to third parties. Each one of these situations requires a different level of planning and a different game plan. Contact Mike Staton or any representative of Alerding CPA Group and see if we are the right fit for you and your company.
This post was written by:
Michael A. Staton, CPA
Mike is a Certified Public Accountant and is Co-Founder and Managing Director of Alerding CPA Group. Mike has served closely-held businesses for over 30 years and was named the Accounting Advocate of the Year by the U.S. Small Business Administration in 2001.
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