In a previous blog entry, we discussed the importance of business continuity planning. To recap, business continuity planning is the act of creating an organizational plan that outlines the actions a company should take during crises or disasters. The plan gives a company a roadmap on how to move forward with regards to internal operations and external communication.
Having a business continuity plan has many benefits:
· Gives your team direct actions during possible crises, emphasizing the importance of safety
· Promotes the importance of teamwork and responsibility
· Limits the costs of damage and waste and reduces the loss of revenue
· Creates a “pro-active” image to your clients and general public.
There is a key area of business planning that many manufacturers overlook: business succession planning. If handled incorrectly, transitioning the ownership of a company can end up being a disaster… and that’s not an exaggeration. This is often the scenario in family businesses when the ownership of the company is being transitioned to a sibling, child or other family member.
The president, CEO or principal of a company is very influential both internally and externally. His or her personal style and leadership skills leave
mark on the team and make an impression on
your clients. Strong leaders spend an incredible amount of time and effort, and
in many cases a lifetime, building the foundation of a company and leading it
to success. Owners have to navigate businesses through difficult times in our
economy and make tough calls to keep the company moving. So what happens when
he or she retires? Is out on extended leave, personal, medical, or otherwise
unable to continue in the business?
Unexpected issues aside, all business owners will retire at some point. If there isn’t a structured plan on how to move forward, it can negatively and significantly impact a company. Even when the “incoming president” is intelligent and familiar with the company and operations, some of the issues that may occur include:
· Disruption of business operations
· Loss of employee morale
· Confusion regarding new leadership
These aren’t minor issues to take lightly. In some cases, a failure in succession planning ultimately leads to a significant loss of clients and revenue and even costly litigation. In some cases, the company is left with no option other than to close its doors.
If you are a business owner and are considering retiring, then you should look into business succession planning – especially if the business is “staying with the family.” MMTC offers Family Business Advisor services which focuses on:
· Succession planning
· Transition strategy
· Family councils
· Training needs analysis
· Operation agreements
· Financial planning
· Buy/sell agreements
· “Key man” insurance
· Business valuation
For more information on this important topic, click here or contact us at .