I hear the terms “succession planning” and “exit planning” a lot. Often, printing business owners confuse the terms. Let’s go over each to make sure you’re in a power position to consider your future moves and decisions.
Succession Planning
Succession planning involves identifying someone on the inside, an internal candidate, to fill key leadership roles in your printing company. This is generally the route taken by family businesses, which have a son or a daughter who is ready to assume the leadership role.
Succession planning requires a deep talent pool, which is not always a given with a family business. And it’s important to make sure the person’s potential skill at running the business, goes beyond simply having the right DNA or last name.
In big companies, like Apple or 3M, we see a similar approach. These mega-organizations excel at succession planning because they have large leadership teams to choose from or may bring back a former leader.
Exit Planning
Exit planning happens when an owner or partner plans to leave the business due to poor health, new interests, retirement, disagreements with partners, or just the sale of a profitable business.
It’s smart to create an exit plan for unexpected events, such as illness, death, divorce, or some sort of unforeseen event that affects the principals of a company.
Why not put it off like your other New Year’s Resolutions? The goal of exit planning is to give an owner the resources and stability he or she needs after exiting the business.
Before you find yourself in an exiting emergency, ask yourself these questions:
- How can I provide for an equitable distribution of my estate among my children?
- Who should control and eventually own the family business?
- How can I use my business to fuel the growth of my estate outside my business interests?
While it can be tough to think about a time when you’re not around, it’s a critical part of the process. Now, take a deep breath and consider three more questions:
- How do I provide for my family’s income needs, especially those of my spouse and dependent children, after my death?
- How can I help preserve my assets from the claims of creditors during my lifetime and at my death?
- How can I minimize estate taxes?
The Bottom Line
Whether you’re engaged in succession planning or exit planning, both need to be part of your overall vision and strategic plan. It’s easy to start a business, but the truly wise owner considers how the end will work as well.
Ready to talk about your next move? Get in touch at Rock@RockLamanna.com.
