Words // Sharon Timms
Even the most successful businesses can run off a cliff if they don’t have a solid succession plan in place. Financial advisory firm Fowler’s Group, a second-generation business focusing on wealth management, talks us through why every business should have a succession plan.
You can’t run a business, regardless of its size, without talented people ready to move into key positions when the current occupants leave.
Be it family members or committed employees capable and enthusiastic about taking the next step, succession maintains the strong connection between the two most important things to a business owner – their business and their life.
Succession can also be the perfect way to cap off the business owner’s personal business journey.
But where do you start? When should you start? What do you need to consider?
WHAT IS SUCCESSION PLANNING?
“Most people think of succession plans as a family pass-on, but any business that wants to just keep that business moving forward should have a ‘what next’ plan,” says Jason Fowler, Financial Planner and CEO at Fowler’s Group.
“A succession plan is one that allows a business founder to hand the baton to the next person. That person might be a family member or someone in a management role, or it might be someone external to take over the business.
“The succession might be to allow the business to be in the market for sale, or move into a public shareholder circumstance. No matter the specifics, it’s moving from one key figurehead and business manager to another.”
WHY SHOULD YOUR BUSINESS HAVE A SUCCESSION PLAN?
“Succession plans give a business a longer lifecycle than of the person who created it. It’s creating a business that isn’t reliant on an individual,” Jason explains.
“Even if you don’t want to sell the business, it’s beneficial to think that way as you’ll have built something that’s resilient.
“At Fowler’s Group, we’re a second-generation business.
“Bob Fowler, the business founder and our dad, hasn’t been involved in the day-to-day for almost 15 years. He’s still around though, and he knew he had to allow us as the successors to make decisions, and to make some mistakes.
“For lots of businesses, the owner will find that very challenging. Businesses that we’ve looked over for a long period of time that haven’t been successful at transitioning, generally it’s because of a lack of relinquishing control from the owner.”
WHAT ARE THE THREE KEY FACTORS IN CREATING A SUCCESSION PLAN?
“Firstly, plan for it to happen. Even if you have no intention of selling your business or growing it generationally, planning your business around you not being in it will only create a better business.
“Secondly, identify that next generation. Is it someone inside the family? Is it someone external? Give them some responsibility, concede a little control and test the waters.
“Finally, plan if it doesn’t happen. You need to continue having options outside of the business – additional assets, superannuation.
“If your business is structured so that it provides you an income but has no commercial value or you don’t want to sell it, you’ll still need to plan for the ’what next’.”
WHAT CAN GO WRONG?
“Not having a plan!
“Don’t think about what could go wrong. Think about why you want it in the first place, and work backwards from there.
“Create a plan, even if you don’t think you’ll need one – it’ll create a better, more robust business anyway.”
Connect // fowlersgroup.com.au