Many owners are strategically looking forward to the day when a succession plan can be implemented, or an exit strategy can be executed.
Every company should have a succession plan. Owners of smaller companies may want to pass the organization down to younger family members. It is a great way to pass wealth from one generation to the next and keep the company in the family, which often means the culture will remain the same. This type of succession plan should be developed 1 to 1.5 years in advance in order to position the staff and the company for the change in ownership/leadership.
Mid-sized companies should have a succession plan in place for all key personnel. Employees retire, move, decide to work elsewhere and sometimes are asked to work elsewhere. When these individuals leave, work must still be completed with the least amount of disruption to operations as possible. A succession plan should be in place for each key individual within the company. This is a component of the continuity plan that all companies should have in place.
To most people, the term “exit” in business often means selling a business. While that is certainly true, in today’s business environment, it can also mean selling off some technology, a “cash cow” the assets of a division, etc. More and more companies are implementing their exit strategies – mainly through mergers and acquisitions. Having an exit strategy in place can often mean a successful exit strategy. This type of exit strategy usually requires 2-3 years of strategic planning and implementation in order to have the most successful exit.
One key component often overlooked in the succession or exit plan is the development of the knowledge base. Capturing and storing the internal knowledge of an organization is often overlooked, but a necessary component.
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