Succession Planning and Exit Strategies for Business Owners
Succession planning and exit strategies are typically topics that might seem too far away for small and medium-sized business owners, especially when the demands of day-to-day operations are pressing. But preparing for your business’s future can pay off handsomely as you build resilience, reduce risks, and plan for retirement.
What are some critical aspects of business planning that can help you lay the groundwork for a secure future?
Understanding Your Journey
As an accountant who pivoted from IT Services to an Outsourced Accounting Services firm back in 2012, then ten years later to an Accounting Service (CAS) firm, Jonathan Bello has experienced firsthand the value of creating a scalable, repeatable business model that offers an exit strategy. His message is clear; “I want to help others do the same with the sound advice I’ve received from mentors, business associates, and communities I’ve been a part of.”
Mitigating Risks: The Triple D’s and Beyond
If you’re not planning ahead, you’re at risk to handle the ‘Three D’s’: Divorce, Disease, and Death. These unforeseen circumstances can seriously affect your business if you don’t prepare for them. You might think they’ll never happen to you, but death is inevitable and usually doesn’t give you a heads up, disease is often stress related and if you don’t take care of yourself, a serious possibility – and divorce as unthinkable as you like, has a national average is 9.2%.
What makes you a resilient business owner?
You have to mitigate risk, work with others (you’re not an island), and have a sounding board of trusted professionals to count on. What else do you need?
Insurance: Adequate insurance can offer a safety net for your business, cover unexpected losses and provide financial stability. Are you fully covered in case of an emergency or sudden loss?
IT and Cybersecurity: Protecting your business from cyber threats isn’t just a “want to have”, it’s a must-have. By investing in robust cybersecurity, you’re able to shield your business information and client data. Here’s what can happen if you don’t have cyber security insurance.
Securing Key Talent: Let’s face it. Your employees are your most valuable asset. Retaining your key players can be done through incentives and creative benefit strategies. Chances are, you want the best to stick around and drive your business forward. Your business is more valuable with a valuable team.
The Power of Community
As a business owner, you also have to remember that you can’t do everything on your own (as much as you think otherwise). Jonathan is the first to agree that he wouldn’t be where he is without his community, and mentors who have guided and believed in him. “People like Joe Woodard, of Woodard Events, LLC, and my Business/Practice Coach, Richard Roppa-Roberts, of Quasar Cowboy Consulting and Roundtable Labs have both played instrumental roles in shaping my practice. As Founders of their respective companies, they’ve seen it all.”
Building a community and creating a sounding board can help you navigate growth issues and just about every other serious concern including production, administration, and marketing. If you’re unsure where to start, check out trade organizations, conferences, networking groups, and online platforms like Facebook and LinkedIn. Shift your thinking and look at your peers as allies, not competitors. (More on this topic in our blog next month.)
5 Key Takeaways for Succession and Exit Planning
1. Act as if you’re preparing to sell or pass on your business. This will make your business more resilient and help you reduce risks. Once you’ve adopted a succession or exit planning mindset – or even a retirement mindset, it’s easier to check off items and complete projects to help you get there.
2. Consider the ‘Three D’s’ in succession planning. They’re the big ones and they’re real. Divorce, Disease and Death. Make plans now – or at least think about what you’re going to do in the event of one of these D’s shows up on your doorstep. Jonathan is quick to agree. “I’ve made D-Day decisions and even though they were uncomfortable, I sleep easier at night knowing I created my own plan”. Frank Sinatra said it well, “I did it my way.”
3. Invest in insurance, (IT, and cybersecurity). Protect the company you worked so hard for. Don’t penny pinch when there’s a major payoff, not too far down the road. Invest in cybersecurity and IT to avoid a potential cyber-attack. If you wait till you’re signing your final documents and all heck breaks loose, it could be too late. Resilient business owners plan ahead to protect their assets and mitigate risk.
4. Secure key talent for long-term resilience. Parents say that they’re as happy as their least happy child. Take the stand that your employees are part of your family. You’ve nurtured and groomed them for years. Make sure they’re onboard to take you through the next steps, and that they’ll support you through the transition.
5. Seek out and value your community. At times, you may feel like you’re working in a silo, but that’s not best practice. Collaboration is key. You can start a business on your own, but you can’t build it to where you want to go alone, especially as you plan your exit strategy. Respect your community and listen. You don’t have to agree with every opinion, but there’s validation from the collective voice of experience.
If you know Jonathan Bello, you’ll agree that he’s an optimist about business and life – but also a realist. He knows what it takes to be resilient, build a strong business, and look at the big picture. His advice is simple. If succession planning and exit strategies are in your future, it pays to think in the now.
Ultimately, he says, “do what it takes to ensure continuity and success. That way you’re prepared for no matter what comes. Preparing for tomorrow starts with today.”
One 8 Solutions continues to remain focused on trends in the local and global business community to ensure we have your best interest in mind. Setting your business up for success with accurate and efficient business expertise is what we stand for. Click here to schedule a no-cost, no-risk Zoom call to see how we can help you.
