Succession Planning is not a Four-Letter Word
With 75% of small and medium-sized enterprises owned by Baby Boomers, a massive wealth transfer estimated at around $1.5 trillion is expected within the next ten years.
The key to sustainability and success is to bulletproof your business today and make it ready to sell.
Now, you may be reading this and saying, “But Marc, I just started my business.” or worse, you could say, “Buh Humbug! We’ve survived decades of failures and prosperity…. What could go wrong?”
What are you doing to protect what you’ve built? Succession planning is not only the logical step to take to guard against crisis, but it’s also proven to ensure the business’s success.
Jon Makowski
According to Action Coach Jon Makowski, owners must first transition from an owner’s mindset into an entrepreneur’s mindset. The end goal is to transition the business from a job to a profitable company that runs independently of its owner. The belief that ‘this business needs me’ should develop into a realization that ‘this business is successful despite me.’
Plan Like an Athlete
“If you are an Olympic athlete, you’ve got a pretty good idea on the numbers you’ve got to hit four years from now. So you work backwards on every training regimen, every event on your health, fitness, and nutrition from that endpoint in mind back to day one starting in training.
That’s what businesses need to do as well. Start now to make sure that in those six, eight, ten years out, they do have a viable, commercially profitable enterprise that can run without it,” explains Makowski.
If Your Business Cannot run Without You, It’s Not Worth What You Think
In a MasMutual study, the sale of small and medium-sized businesses resulted in past owners’ dissatisfaction about the outcome because they were ill-prepared and didn’t get the valuations they expected.
“What we do know is that 80% of businesses that do go up for sale don’t sell for what they were asking, or they get unfavourable terms,” shares Makowski.
In an episode of Marc Haine Live, Stop Trading Your Time for Money, consultant Yvonne Weld said that when she had a near devastating crisis, being able to hand the keys to her assistant was a Godsend. Her business kept running in her absence–her clients did not suffer, the company did not suffer, and her pocketbook did not suffer.
My mentor, Hugh Culver, recently sold his internet business. The one lesson he says he learned was that if you set up your business to sell from Day One, it will be a successful business.
When the CEO at Action Coach Canada helped found private equity, owner-operators consistently thought they had great businesses. They had a $10 million mindset and lived a $10 million lifestyle. Unfortunately, they had trouble even getting to the valuation of $5 million or $6 million. That changed their mindset, saying, wow, we don’t have what we thought we did. We still need to work because we can’t retire yet.
Makowski provides Six steps that owners can take to start the process of Succession Planning and increase the value of their business.
1. Hire a coach for accountability and support.
If you’ve been following my blog for any time, you know I am a big supporter of having coaches specializing in different aspects of my development. Check the 6 Reasons Why You Need a Business Coach.
What a coach does is hold you accountable to yourself. Getting a subject matter expert who’s not tied to the business is hugely valuable. A business coach has no vested interest in the company but will provide a richer perspective to your business.
“First and foremost, I think every business should have a coach. Our personal goal is to have an Action Coach for every business in Canada. We’ve got about 1.2 million small and medium-sized businesses across the nation, and we are severely, severely lacking in the capacity for coaches,” reports Makowski.
2. Retrace your steps to master and strengthen your business foundations.
“Our success process starts really at the foundation of mastering certain aspects or pillars of the foundations of businesses. Your cash management, your time management, your delivery management, destination management, from there then we can pivot once we have a solid base,” says Makowski.
Check out my interview, the 7 Foundational Keys to Business Success, with serial entrepreneur Ivano Ongaro.
Watch my Interview with ActionCOACH Jon Makowski
3. Learn to pivot and reinvent your business
A candy business that Makowski was coaching had to pivot and reinvent itself when Covid-19 hit. During the lockdowns, children (and their parents) were not allowed to come into the store.
With guidance from their coach, they looked at their strengths and weaknesses and brought their team together to brainstorm opportunities.
They started calling their customers from their client list and doing home deliveries in Easter Bunny and super-hero costumes. They knew there was more to selling candies. It was the thrill of a magical experience that kids go through whenever they come and visit their magical, friendly and fun shop that makes them unique. As a result, they didn’t have to lay off staff during the lockdown, and their sales skyrocketed, building incredible loyalty along the way.
Once we’ve mastered the foundation, we can pivot our business by identifying our niche. What makes us unique? What’s our unique selling proposition? And then start marketing and generating increased revenue.
4. Generate and nurture leads to convert them into loyal customers.
Owners must be able to dive real deep into things like leads and conversion rates. How many repeat customers do we have, and from which marketing sources are they coming?
These numbers can make them open to instituting these things in how they run their business. And to stop discounting the services and products that they are offering.
“Owners, predominantly in smaller businesses, are a little bit more emotional about their business. In an attempt to “make the sale,” they will discount their services or value a lot of times,” says Makowski.
5. Leverage your team and reliable systems.
Personally, it drives me crazy when I see business operators marginalize their employees. “She’s just a server.” “He’s just a dishwasher.”
I am constantly amazed at how much employees know about the business. From my perspective, this is the number one untapped resource most companies have.
Recognize the capacity that each member of the team can handle. Be able to delineate their key responsibilities and KPIs. Document and create standardized operating procedures (SOPs) and systems to make them sustainable and time-efficient.
6. Ensure that your company vision aligns with the rest of the team.
“The owner is the leader for the team. The team is the one who is dealing with the customer. And the customer is what feeds the business and, ultimately, the owner. So you’ve got to make sure that all of those are very much in line and synergistic,” says Makowski.
Here’s the formula for change in anything, according to Makowski.
“It doesn’t matter if it’s personal relationships or business ownership. Your dissatisfaction times what your vision is of what your goals and dreams were both personally and in the business, plus your first steps in making a change has to be greater than what your resistance to change is.”
About ActionCOACH
The concept of business coaching, as it is widely known today, was pioneered in 1993 by the founder of ActionCOACH Brad Sugars. More than two decades later, the company that started it all is still on top. In fact, no franchise in the “business coaching” category is 10% of our size in total revenues. From a humble one-man-show operation to a multi-million enterprise, ActionCOACH continues to blaze the trail and serves as the business coaching industry’s most innovative company.
Free How to Survive and Thrive through the Coronavirus Economic Crisis Video Series.
Get your ActionCoach resources here (Brad Sugar’s book, Buying Customers, and the Action Coach, Make Your Business RESILIENT):
www.actioncoach.ca
www.actioncoachfranchise.ca
