Business Transition Planning
A business owner planning for his or her future is confronted with a confusing array of planning options, and with multiple terms — “start-up planning”, “continuation planning”, “exit planning”, “succession planning” — that deal with similar and overlapping issues.
It might be simpler to think of all such planning as dealing with transitions into and out of a business, and to remember that in every case an effective plan will involve planning both for the individual owner and for the business itself. While a person can plan to start a business without thinking of the value of the business as a key part of their estate plan, and while it is possible to plan an owner’s exit from a business without thinking about what will happen to the business after they leave, this sort of short-term, narrowly focused planning is likely to lead to problems.
The reality is that many business owners fail to do any real long-term planning, either when they are starting the business, or when they are leaving. Some don’t understand the importance of planning. Others feel that they don’t have time right now, or are concerned about the cost of planning. Sometimes owners have trouble exiting because they just can’t escape the “gravitational pull of their business” — they cannot imagine their businesses without them, or themselves without their business. In each of these cases the result is the same — planning gets put off until it is too late.
I have always felt that the key to good planning is: 1) to begin with education to get people motivated and fully engaged in planning; and 2) to have an established process to keep the momentum going all the way through the moment of transition, and beyond.