As a business owner, you’re most likely consumed with the day-to-day running of your business and driving growth. It’s your baby and the last thing you want to do is sit down and make a plan for turning it over to someone else. As a TAB advisor, I have met owners who think they’re too young or believe that they’ll run the business for the rest of their lives, so why bother with succession planning? A 2014 PwC survey found that by 2019, more than half of Canadian family businesses are expected to change owners, but that only 20% of those businesses have a clearly documented succession plan in place for when the time comes.
Why does every business owner need a succession plan? We don’t have a window into the future and have no idea if or when events may arise that force succession – premature death, disability, personal or financial reasons or retirement. Without a succession plan, your business’s fate is uncertain and could be left in the hands of the court. It may also cause disputes among family members as to who should take over. The only way to control your company’s future and to protect yourself, your family and your employees is with a succession plan. I’ve outlined below what I feel are the three top options for succession.
- Transition the business within the family: If you choose to transition the business within the family, you’ll have to choose a successor. This may not be an easy (or popular decision) if multiple family members work in the business and all want the position at the helm. There may also not be a qualified successor among the family members, which brings with it a unique set of problems.
- Sell the business to a partner or employee(s): You’ll have to determine the value of the business. There are many factors that affect the value of your business, so it’s important to seek assistance in helping you calculate an accurate value. And the value of your business will continue to change so it will have to be re-evaluated on an ongoing basis.
- Sell the business to an outside buyer: Same as above.
It’s never too early to create a succession plan. It should be done by experts as it involves several disciplines including accounting, financial services, and law. There isn’t a one-size-fits-all succession plan template that you can download and plug information into. Each business owner will have different ideas about what their business succession should look like and the experts can ensure that your wishes are carried out.
I would be remiss if I also didn’t mention that in order for any succession plan to really succeed, you’ll need to have the right people and processes in place that allow for the day-to-day operations of the business to function without you.
No matter how good your succession plan is, it can’t anticipate changes that may affect your business in the future, which is why it will constantly have to evolve and change. I believe in starting early, setting expectations, and making the decisions that are right for you and your business. Succession planning is the only way to control the fate of your business.
Have you started working on your succession plan? Want more advice on succession planning, or general advice from a seasoned business advisor? Find out if a TAB Board is right for you!
One of the biggest challenges I have seen many small business owners struggle with is that of delegation. Most owners started their businesses on their own being the person who does everything and so letting go or delegating can be difficult from many angles. Let’s face it, if you continue to do everything, then why do you have staff and how can you ever hope to grow your business?
Delegation means letting go of the day-to-day tasks associated with that responsibility, but by no means does it mean completely letting go of that responsibility. In other words, if you have hired a sales person to take on the responsibility of sales for your company, although you may not be making the sales calls, you do need to ensure that your sales person has the right sales processes, sales metrics and that they are in fact the right person for the role.
Without the right processes, metrics and people in place, it’s likely the onus will fall back on you to get things done. Sounds familiar? Letting go isn’t easy, but having a proper delegation structure in place will allow you to focus your energy and resources on building a successful business. Here are my recommendations for effective delegation:
1) Have the right processes
Ensure you have the right processes in place to ensure that the task or responsibility will be done correctly and in accordance with your standards. For example, if you are delegating writing you will need to ensure what type of writing, how much time the writing should take, what structure the writing must have, what approvals are required, what source materials, and how the writing must be started. The process needs to be written down, explained to the person who you are delegating it to, and followed up with by you to ensure the process is being followed.
2) Measure your success
The only way you can truly know if the process is working right is to measure its effectiveness and subsequent success. To measure the success of the objective, you may want to consider KPIs as they are an effective way of measuring key business objectives, as are analytics. There are numerous measurement tools available, so finding the one appropriate for your business is important. Whatever metric you choose should be spelled out and communicated to the person taking on the delegated task or project. They need to understand that they are being measured in their responsibilities.
3) Have the right people
In a previous blog, I discussed the importance of building a solid team. Ensuring you have the right people working for you means that you can delegate appropriate tasks with the confidence they will be completed accurately and efficiently. Trust and communication are two qualities that can make or break a business. In my many years as a business advisor, I’ve witnessed numerous business owners cycle through employees simply because they had the wrong person in the role who was not fully capable of handling the responsibilities despite having the right processes and metrics in place. Invest wisely in securing the right team. With the right team in place, you’ll experience no hesitation in delegating important tasks and responsibilities.
Delegating is what most business owners crave – you want someone or something to take the huge responsibility of doing it all yourself off your shoulders. Have no fear, by ensuring you have the right processes, metrics and people in place will mean you can lessen your load, and free up the much-needed time to do what you have always wanted to do: focus on building your business.
When I speak with business owners about their assets, they often refer to their tangible assets such as their office(s), computers, and machinery. However, the value placed on intangible assets, such as people, knowledge, relationships and intellectual property, is now a greater proportion of the total value of most businesses than is the value of tangible assets.
It’s these intangible assets, rather than the tangible ones, that enable a company to distinguish itself from competitors. Your intangible assets might include your customer lists, intellectual property, business plans, recipes, pricing formulas, and trade secrets, and are typically the foundation upon which your company is built. Think about KFC’s intangible asset – the special, secret recipe, without which KFC would just be fried chicken.
To ensure your “secret sauce” does not become that of your competitors, you’ll need to develop a strategy to properly protect your intangible assets. To achieve this, you’ll first need to write a list of your assets and make sure you have back-up (hard drive/cloud) for this list.
Although I recommend sitting down with a corporate lawyer who specializes in intangible asset protection, I’ve outlined below a few very simple things you can do on your own to start protecting your intangibles:
Make sure you have employment agreements for all your staff. These agreements stipulate that all company assets are proprietary and that unauthorized disclosure of confidential information such as pricing formulas, customer lists and other data and information is prohibited. Depending on the type of business and the employee’s role, employee agreements can include clauses to help ensure that any invention or discovery made by an employee while employed with the company is the property of the company.
Even though you own copyrights without filing, you should have your corporate lawyer file for you to fully protect those rights. You can start the process to receive a patent or trademark by submitting an application to the appropriate governmental agency. Be prepared, as the application requires you to provide an explanation of why the asset is proprietary to you.
Confidentiality or nondisclosure agreements, designed to protect your valuable trade secrets, can be very simple or very detailed, depending on the requirement. At a basic level, they commit a party (vendor/freelancer/supplier) to keep specific information confidential, to not share it with potential competitors, or use it for themselves to gain market share.
Your Digital Data Backup
It seems simple, but many businesses owners still store anything important in their head. Make it a priority to back up everything that is important to running your business. Digital documents can be easily backed up to a server that is in a different location or on the cloud. Put a plan into action to backup all your data and get it done.
As a responsible business owner, you’ve done everything you can to build a successful business – now invest that same energy into protecting those very valuable assets.
Remember back in January of this year, when your vision for your business was fresh and clear in your mind, when your business goals and objectives had a well-defined path to achievement? If you are like most business owners, your vision may have remained the same, but the execution and delivery to meet your goals and achievements was not exactly how you had planned. This is typical of most businesses, as our plans cannot possibly allow for unpredicted circumstances, whether positive or negative.
In preparing for the New Year, I encourage you to take the time to reflect on this past year and start preparing your plans for the New Year by considering the following questions:
- Revisit the tracking of your business plan and any other planning documents including your action plan, and review last year’s goals. Did your business accomplish what you set out to do? Why or why not? Write a list of all the company’s major accomplishments for the year (or lack of them). These will be handy when you do your business planning for the current year.
- What barriers prevented you from reaching your goals? How can you avoid them or prepare for them in 2016?
- What is the key area you want to improve on in 2016? What steps do you need to take to accomplish this e.g. hire more staff, expand into new markets, increase marketing/branding, etc.?
- Are there things you might have done differently e.g. hired too quickly, expanded too quickly, didn’t hire fast enough, etc.?
- Have you started a business plan for 2016 that includes writing your goals and plans for next year?
- Have you created a budget for the next year if you work on a calendar year fiscal basis?
- Have you reviewed your vendors and providers recently? Do you need new ones or replacements for existing ones? Review your list and score them, see where you might need to add or even get rid of any that are not providing you with added value.
- Have you reviewed and updated your marketing and advertising plans? Make sure you consult with your internal or external marketing professional to ensure you are strategically placing your marketing budget to align with your business goals.
We all know how important business planning is, so before you break for the holidays, take the time to reflect and plan for the New Year. You know the cliché: businesses that fail to plan, plan to fail.
Kick the New Year off with a clear plan with attainable goals and remember to take time off over the holidays and enjoy time with your family and friends. Thank you for following my blog over the past year. Happy Holidays.
You may recall from my last post that all successful businesses have three things in common: effective policies, procedures, and processes. Today, I’m going to focus on the third “P”of business – processes. What impact does having effective processes in place have on your business? By focusing on this element of the three P’s in particular, my aim is to help you understand the significance of having processes in place in your business, and reflect on the effectiveness of your current processes.
What does it take to complete a task? A process, you may remember, is the high-level overview of a task – the map that guides you from start to finish through the steps you need to take to reach your objective. When faced with a task, how does your business act? Any successful, efficient business will have clear processes in place, with clearly outlined steps, to deal with such situations.
What types of processes exist in your business? Are they clearly implemented and communicated? To give you a sense of what processes look like, I’ve detailed below some examples of the types of processes that you should have in place in your business.
Example #1: Onboarding
You’re probably already familiar with onboarding, whether it’s by name or in concept. Onboarding is the process through which new employees acquire the knowledge, skills, and behaviours to become effective organizational members.
Do you know what your newly hired employees want out of the onboarding process? Generally speaking, new employees want on-the-job training, a review of company policies and procedures, a company tour, equipment setup, and the availability of competent and approachable mentors. New employees want to learn how to do their job efficiently and start contributing in a meaningful way as soon as possible.
In those first few weeks, new employees form their opinion of your organization. This is why onboarding is so vital. It’s a proven fact that an effective onboarding process leads to higher job satisfaction, higher retention, better performance, greater organizational commitment, and a reduction in occupational stress.
Example #2: Exiting
When an employee resigns or is terminated from a position, a number of tasks must be performed to ensure a smooth transition. If you’ve ever left a position, think about the tasks that had to be performed, the assets that had to be returned. As a business, if you forget to perform any of these tasks, you’re opening yourself up to risk.
You should keep a checklist to be followed when an employee exits so you don’t forget anything crucial. Your checklist may include: an exit interview to gain insight on areas of improvement, collection of company property (laptop, smartphone, credit cards, keys), process outstanding payroll, and the removal of building, computer, and network access. Also ensure that you have the employee’s current address and phone number if they need to be reached.
A clear exit process is necessary for your organization both to protect your business and ensure that exiting employees leave with dignity.
Example #3: Financial
Your business needs financial processes to work smoothly and mitigate risk. Some examples of essential financial processes in your business may include: accounts payable/receivable, payroll and benefits, and budgeting. Financial processes must continue without major failure day by day to avoid financial chaos. Financial processes should be efficient and effective, align with your goals, utilize best practices, and minimize risk of fraud.
The Bottom Line
Put simply, to remain successful your business needs processes of many types. For essential tasks to be completed in a way that mitigates errors and risk, those occupying the top rungs of the organizational ladder must take process creation and optimization seriously.
What do essential processes look like in your business? Are they efficient, or could they use some work?
Being your own boss can be one of the most rewarding career paths, but without a doubt, it can also be the most challenging. Regardless of the size of the business, the leader at the top is not an expert in everything; it has been my experience that they are experts in a field. This means that there are many questions – operational, HR, financial, marketing, sales, and strategic questions – that will need answering.
A few years ago, I met a business owner in the creative field who wanted to grow his business from a home-based operation with no employees to a fully functioning business with a team of dedicated staff. This was something he had been struggling with and didn’t know how to achieve or whom to ask for advice.
Through our discussions, it quickly became clear that in order to truly make changes for a lasting and successful business, this creative entrepreneur needed a business strategy and resources. The owner and I established a series of meetings over the following months to create and detail the business strategy including goal-setting, creating a framework for the business; establishing what services will be offered to maintain and grow the revenue, creating pricing models, and examining additional product lines.
While developing the strategy, we also began planning for the resources needed to implement, support and drive the strategy including assessing locations, rental costs, reviewing staff requirements and duties, bookkeeping and accounting needs, invoicing systems, phone and internet systems, and IT support and back-up.
Once he executed on our strategic and resource planning, his business has not only grown, but is thriving! This business owner is typical of the entrepreneurs I see as a business advisor, where they have a clear vision of what their business is and where they want it to be, but what they need is the proper strategy, resource planning, and business advice to help them realize that vision.
Just as “two heads are better than one”, achieving success and reaching your goals often requires expertise beyond your own skill set. Calling on a business expert will help ensure your business needs are calculated and understood so that your business results align with your vision.
Do you have a business advisor or coach? How valuable have they been in helping you grow your business? I look forward to a lively discussion!
We take risks every day in all aspects of our lives and risk-taking is important in business. In order to sustain consistent growth, be prepared to take on the risks and challenges that will help your business be successful.
Taking a risk requires careful evaluation and calculation. This will allow you to see if you are able to manage the risk and if your business is able to take on any challenges this risk may bring.
With my experience helping CEOs mitigate and evaluate business risks, I’ve come up with a list of 5 risks every business owner will face when growing their business:
- Sacrificing personal capital:
While some business owners are able to begin their journey by relying on external funding, many have to use their personal funds. Using your own funds may be a necessary risk that may be influential to the growth of your business.
- Putting trust in your employees:
It is impossible to do everything yourself. At some point in your business’ journey of growth, you will need to rely on employees. Putting a large amount of trust in employees is a risk you’ll have to take to move your business forward.
- Trying something new:
If you haven’t seen positive results from the way you’ve been running your business, try something new. Develop a new strategy, consider your product/service line – thinking outside the box and not being afraid to explore new possibilities has proven successful for many businesses. Change can lead to success.
- Putting yourself out there:
Get out there, meet people, and connect – not easy at first, but this is the best way to make valuable connections and grow your image as a business and as a business owner. Attending events, working the room and being active on social media are all methods of making connections and, while they can initially be intimidating and unfamiliar, are sure to produce short and long-term gains.
- Investing back into the business:
Even if your business is not as profitable as you may like it to be, don’t hesitate to invest back in to your business, knowing it will benefit the wealth and status of your business in the long run.
Risks shouldn’t steer you away from success but are necessary obstacles in the bigger picture. There’s no way to completely avoid risks but preparing for and recognizing them will help mitigate their impact. The biggest risk in business is not taking one at all.
What risks have you taken as a business owner? Did the result look like you expected? I look forward to an interesting discussion!