Succession And Capital Value
Many leaders do not think of succession until it’s nearing time to transfer their business into new hands. But succession actually starts the day your business commences.
Active Knowledge Questions:
What are you planning on the succession front this year? Do you understand the interdependency of capital value and succession planning?
If you have set your growth agenda for this year, then succession planning should be part of it. And if it’s not, you should pause and rethink the importance of succession planning to growth, profitability and capital value.
Family businesses come in all shapes and sizes but no matter how large or small, young or old your business may be, succession commences the day you start your business.
Many people only think of succession in terms of transferring a business along family lines. Often believing it is only necessary to start undertaking it just before such a transfer is to occur. Succession is so much more than that.
At its core, succession is about the continuity of a business across generations, whether it remains in a family or not. You may sell it, you may appoint an external management team, or you may transfer it along family lines. All these variations are succession options.
Succession depicts the future of a business and creating that future should start at its conception and be compounded every day of the business’s life. Succession builds capital value, which reflects the enduring ability of the business to trade profitably.
Essentially, if you are not planning for succession, you are not planning for the future of your business.
Over the next month, I will discuss building the capital value of your business and how it goes hand in hand with succession. But for now, the important point to bear in mind is succession planning equals greater capital value.
During December 2017 and January 2018, Orienteering Succession ran a series of articles reviewing key themes. Here is the first of these articles, if you would like to revisit the series, ‘Thinking About Business Succession?’.
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All the best in the success of your business,
Richard Shrapnel
