A succession plan will help ensure your business continues after you move on You have spent your career building a successful business. You’ve managed a shifting economy, market changes, technological innovations, changing workforce needs, and other challenges. Now, you’re thinking about the next phase of your business lifespan and your next personal steps. How do […]
A succession plan will help ensure your business continues after you move on
You have spent your career building a successful business. You’ve managed a shifting economy, market changes, technological innovations, changing workforce needs, and other challenges. Now, you’re thinking about the next phase of your business lifespan and your next personal steps. How do you ensure that the next steps you take are the best ones for you and your company?
In 2023, the Exit Planning Institute surveyed more than 1,100 business owners nationwide for its National State of Owner Readiness Report. Among the survey findings:
• 73 percent of privately held businesses expressed a desire to transition in the next 10 years — equating to $14 trillion in value.
• 77 percent of business owners aged 60-78 — the Baby Boomer generation — would like to exit their business in the next 10 years. And yet,
• 75 percent of owners “profoundly regret” selling their business a year after the sale.
• 50 percent of business exits were due to “unplanned exits.”
It’s a simple fact that successful businesses need to evolve. That is where business succession planning becomes critically important.
A succession plan can protect the assets you have so carefully developed and stewarded, as well as give you a clear line of sight on your business’s future. This is true whether you choose to pass the business on to family members, transfer it to employees, or sell it to an outside party. It also helps you to think about key leadership roles, identify team members who can potentially fill them and ensure that those key employees are trained and prepared to take on those roles when the time comes. Also, a good succession plan will anticipate and address legal and financial matters that may affect the transition.
In short, a succession plan is a well-thought-out, carefully planned roadmap for a successful transition. For a business owner, that means peace of mind.
Of course, there will be challenges. Many business consultants, accountants, and lawyers refer to the “5 Ds” of succession planning: death, disability, divorce, disagreement, or distress. These are unpleasant topics, but a succession plan is critical to preparing your company to navigate adverse events and difficult scenarios.
Assembling a team to develop your succession plan can be as straightforward or as complex as the business itself; be sure to include your financial advisor, banker, attorney, and accountant. Depending on your circumstance you may also want to include your spouse or life partner and your management team.
Like so many other aspects of business, communication is key. Make sure you socialize your succession plan widely with your team, family members, key stakeholders, investors, and potential buyers. Knowledge and understanding are vitally important to the success of any transition.
You’ve spent time and effort building your successful business over the years. As you get closer to making decisions about what’s next, investing time and effort in creating a well-thought-out succession plan will be well worth it.
David Kavney is NBT Bank’s president of Central New York/Pennsylvania. Michael Durand is director of institutional portfolio management at NBT Wealth Management.
David Kavney 
Michael Durand