22 November, 2018
What have you done about succession in your business?
Succession planning is an important aspect of any business and should be about creating a robust, sustainable quality culture and solid service ethic, which creates value in a business for both current and future owners.
8 key points to help build a sustainable business:
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Start early – succession planning ideally shouldn’t be left until when you are looking to exit the business at retirement age, starting the process in your 40s and 50s gives you time to develop a successful exit strategy and provides better returns to owners.
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Seek assistance from the right key advisors, professionals and other experienced business people that can give you the right advice and feedback.
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Ensure the value of the business is “in the business”, not “the owner” by creating a strong brand with credible and measurable points of difference.
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Where possible, secure medium to long term contracts with your customers. This helps create more certainty for them to receive sustained service quality and for your business it demonstrates potential future income, which in turn creates value and makes it a more attractive proposition to any potential purchaser.
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Build a culture of excellent service by establishing rigorous service level agreements with your customers and suppliers alike so that expectations are clearly defined, met and measured. Review your performance against these regularly to reinforce the value you provide to your customers.
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Educate staff to understand the importance of representing your brand (or your customers’ brands) in a professional, superior and consistent manner.
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Develop close relationships with your customers and strive to become such a valuable part of their supply chain that when the need arises to review rates that their acceptance is more certain for fear of losing the valuable services you deliver to their business.
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Employ staff that share your business values, invest in the development of those that show they have the passion, capability, skills and attitude to help run or potentially take over the business. One method of encouraging staff to stay with your business, which provides ownership is offering shares based on performance – over time this equity is gained in the business that can provide a pathway to future ownership. It also allows for business owners to progressively recover maximum value from the sale of these shares to key staff over time.
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