Nine Succession Planning Mistakes Small Businesses Should Avoid

1. Attempt Succession Planning Without Other Strategic Plans. Succession plans define a company's business heirs, but what will they inherit? They will inherit a company with no vision, no strategy to deal with the competition, and no plans for changing the way it does business, if the current owners spend too little time planning for the future. Every firm should have strategic plans to increase its market value.

2. Fail to Create a Market the Company. Too many small and medium-sized business owners operate under the myth that when it comes time to retire, they will simply sell the business, monetize their equity in the company, and retire with a bundle of cash. But that is more of a myth than a reality. Each year thousands of business are listed for sale, and there are no buyers. The current owners need to market their companies and "create demand" for owning the firm. Otherwise, they may not have any choice in selecting successors or a new management team.

3. Procrastinate. There are a variety of reasons firms procrastinate about developing succession plans: too many pressing matters at hand, thinking about passing the company on to a new generation is depressing, there is plenty of time, and the current owners will be around for a long time. Ironically, firms prepare for unexpected expenses by maintaining cash reserves, but most small and medium-sized businesses fail to appreciate that accidents can happen to owners as well.

4. No goals. If firms do not have an end goal in mind, then they are unlikely to achieve it through succession planning. The end goal should address such issues as when is it time to sell or transfer power, what will the current owners do after the transfer, what percentage of the purchase price can be financed, what type of buyer would be good and what type would be bad for the future of the firm, how should the transfer be executed to minimize the tax burden. It is scary to think about succession planning when these key issues have not been addressed.

5. No Independent Valuation of the Firm. It will be hard to attract good buyers or successors unless agreement on a realistic value of the business can be reached. Sometimes the current owners are unpleasantly surprised that the business they have developed and the capital they have acquired is valued much less in the market than they personally value it. The value of the firm may also depend on external events beyond the control of the current owners, and thus contingency valuations may be required.

6. Sell to an Insider Who has Little Funding. For sentimental reasons, many business owners prefer to transfer ownership to a trusted employee who has been with the firm for years. But generally these employees have little funding to acquire a business. In that case, the current owner will want to prepare a deferred compensation plan that will not leave him exiting the firm with no cash.

7. Ignore Training. Many small business fall into the trap of thinking they have to accept their successors as they find them with their existing endowment of skills and experience, take it or leave it. But if key skills and responsibilities are missing from the background of a likely internal successor, then succession planning will enable the firm to train and develop that successor into a better and more qualified person. Training does not require a person to attend formal classes and be tested on comprehension with exams. On-the-job training may be just as valuable, e.g., where a person is given responsibility for the firm's finances or marketing efforts prior to succession. Leadership training courses are rarely worthwhile. The one-size-fits-all, generic leadership training courses are the worst of all. If people have natural leadership skills, these tend to emerge in the course of their daily interactions with people.

8. Keep Succession Plans a Secret. When the staff is left in a vacuum as to who will succeed in running the firm, it creates the impression that the firm has no succession plans. Those eventually who become new owners will be treated with suspicion. Keeping the succession plans secret hinders existing managers and employees from identifying themselves as possible successors. Without a firm commitment or expectation about the future, key personnel may leave the firm.

9. Develop a Succession Plan Once. Some businesses make the mistake of believing a succession plan is the equivalent of writing a will. Once it is written, there is allegedly no need to revise it. But succession planning is a dynamic process that involves training, hiring, internal development, and external marketing. Succession plans will grow stale if they are not periodically updated and revised to address changes in the market place that the firm is currently facing and will face in the future.

Dr. Michael A. S. Guth, Ph.D., J.D., is a risk management consultant and practicing attorney at law based in Oak Ridge, Tennessee. In addition, Dr. Guth is a financial quant and former investment banker, having worked for Credit Suisse First Boston and Deutsche Bank in London and Frankfurt. He specializes in developing investment strategies and strategic plans for small and medium-sized companies, as well as mergers and acquisitions for large corporate clients. For five years, he consulted to the electric power and gas industry in the USA, and even managed the Middle Office (financial risk control) groups for two trading floors.

Dr. Guth has taught over 30 courses on-line at the undergraduate and graduate level on topics ranging from Managerial Economics to Strategic Management to Business Law. He can be reached through web page http://riskmgmt.biz/succession2.htm

Barrington South Lincoln Stretch rentals .. Lockport Chicago limo O’Hare
In The News:

A newly discovered security flaw with your iPhone or iPad could leave your personal information vulnerable to hackers. Kurt the CyberGuy explains.
Modeled after a traditional bell-shaped skirt worn by women in Kosovo, a theater's roof is draped entirely by solar panels to generate renewable energy on-site.
Kurt the CyberGuy explains how to protect yourself from malicious Chrome extensions that can steal sensitive information like password managers, crypto wallets and banking apps.
Stellantis' innovative STLA AutoDrive 1.0 system allows drivers to safely take their eyes off the road and their hands off the steering wheel.
Here are some travel hacks to save money on your next vacation including setting up price alerts, remaining flexible and checking for 24-hour price drops.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
One report claims at least 25 million people were targeted by infostealer malware between the beginning of 2023 and the end of 2024, capturing bank card details and passwords.
The LaserWeeder G2 uses lasers, artificial intelligence and advanced robotics to offer an alternative to chemicals traditionally used in farming.
Tech expert Kurt “CyberGuy" Knutsson says a malware app called SpyLend is posing as a financial tool, hitting 100,000-plus downloads.
Tech expert Kurt “CyberGuy" Knutsson says Clone Robotics’ Protoclone mimics humans with 1,000 muscles – too human for comfort.
Tech expert Kurt “CyberGuy" Knutsson urges you to use Apple’s App Privacy Report to see what your apps are really up to.
Tech expert Kurt “CyberGuy" Knutsson talks about how to smoothly transfer your data from an old laptop to a new one using cloud storage or external drives.
Kurt the CyberGuy offers tips to safeguard your personal information as scammers become more sophisticated with scam texts and other methods.
WeRide's unmanned electric delivery van, the Robovan W5, has 194 cubic feet of cargo space and can carry payloads up to about 2,205 pounds
Kurt the CyberGuy recommends deleting 16 browser extensions immediately in response to a report saying more than 3.2 million web users were affected by a security breach.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
A robotics firm in China claims a robot has performed the world's first humanoid robot front flip, which is significantly more difficult than a backflip.
A digital ID may be even more secure than a physical ID. Storing your driver's license in your Apple Wallet is an ideal solution for commuters.
A cybersecurity firm has shed some light on just how common tax scams have become. Kurt the CyberGuy offers his advice for how to protect your refund.
Lifesize Plans offers immersive walk-throughs that allow customers the opportunity to tour a home's design before construction actually begins.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
A man invested $4 million in bitcoin and lost it all with a single click when he was targeted by a vishing scam, which uses phone calls to trick people.
Expandable's Touchdown is a designer trailer that promises a luxury off-grid living experience and unfolds into a home in about 15 minutes.
Major employee screening company data breach affects 3.3 million people. Tech expert Kurt “CyberGuy" Knutsson explains what happened and gives five ways to protect your data.
Kurt “CyberGuy" Knutsson reveals mind-blowing tech that gives you sunlight on demand.

5 Strategies That Will Boost Your Business Productivity Today! - Part 1

Building a dynamic small business is a constantly evolving, increasingly... Read More

10 Ways To Make Your Business Unique

1. Largest Selection -One way that you can make your... Read More

Expanding your business in a franchise system

If you are a successful franchise of a large franchise... Read More

The Power of Planning

I am surprised how few sales professionals, independent consultants, and... Read More

How to Write a Business Plan Market Analysis

Writing a business plan is an essential part of the... Read More

Questions to Ask Yourself When Starting a New Home Business

I love the excitement of starting up a new home... Read More

Strategic Planning and Total Quality Management

No matter what product or service you provide you will... Read More

Business Problem Solving

Is there really anything as a problem? Does chaos or... Read More

Going Self-Employed ? A Few Handy Hints

The day you decide to take the plunge and work... Read More

Pressure Washing Entrepreneurs Can Help With Government NPDES Permits

If you own a pressure washing business one of the... Read More

Consolidation in the Software Industry is Hardly New: Obsess About It or Risk Losing it All

Some analysts credit [Larry] Ellison with anticipating the consolidation in... Read More

The Chief Cause of Business Failure & Success

Business rises and falls on leadership. According to business guru,... Read More

The Accountability/Alignment Process: Three Steps to an Accountable Organization

The Accountability/Alignment Process: Three Steps to an Accountable Organization Generating... Read More

6 Steps To Laying Out Your Competitive Strategy

Why do so many companies languish and watch as their... Read More

Business Planning and the ?Bozo? Factor

"Bozo" ? A clown with a forlorn look, always finding... Read More

What is Your MSP?

For many consumers and producers, MSP is an acronym for... Read More

Alice In Wonderland - A Parable for A Business Plan

Remember reading "Alice in Wonderland?"She asks the Cheshire Cat, "which... Read More

How to Achieve E-commerce Success ?You Gotta Plan!

Before becoming a netpreneaur, I was an entrepreneur. First, I... Read More

Do You Have A Customer Identity Crisis?

The trick is to determine what uniquely identifies your best... Read More

Don?t Just Talk About the Weather, Use It to Advantage

A well known, national chain of restaurants discovered that certain... Read More

Making a Decision to Outsource: Strategic Constraints

Many companies are reluctant to dive into outsourcing ocean because... Read More

Urban Flight in Ohio

Many of Ohio's downtown areas are in need of upgrading... Read More

Strategy Without Tactics is Futile

From time to time there seems to be a flurry... Read More

Why Do a Business Plan?

To Grow (Catapult) Your Business That's Why.When it's in your... Read More

Connecting Your Offline Business to Your Online Business

These may sound like no brainers, but you'd be surprised.... Read More

Downers Grove limo Chicago ..