Does Your Business Have a Transition Plan?

I am willing to bet you have a family member or friend who left a business to an unprepared spouse. This is often the reason that only 30% of family businesses make it to a third generation.

Let’s begin with a few basic facts: 62% of Americans say they have life insurance, but only 45% have a Last Will and Testament, and worse yet, only 9% of business owners have a transition plan for their business. Family-owned businesses comprise over 50% of all businesses in America, so why do so few plan for an inevitable transition?

The easy answer is we are all too busy trying to survive. Although true, you have to ask the rhetorical question, will our business survive if we don’t plan? Statistics tell us probably not. And it’s a shame that some great businesses will not survive because they haven’t identified a motivated successor.

The best way to create a sustainable business is to develop a governance (board) model that provides a built-in transition process. We’ll write about governance in a future article. Short of a Board model, progressive business owners write a simple transition plan that answers the questions: who, what, when, where, why, and how the business should transition in the event you are no longer able to continue in your current role.

If you are interested in learning more about governance or transition planning, send us a note.