make plans to secure the future of your business

Your business is the product of years of hard work, dedication, and financial investment. It can be challenging to decide when it’s time to step back and how to choose a successor who will build upon the legacy of what you’ve created. You don’t have to wait until retirement to being succession planning and, in fact, you shouldn’t wait. 

Exit strategies

The right exit strategy for your business will be entirely unique to you, your business size, and your values and goals. As you begin succession, establish goals for your exit. Your priorities will help determine which strategy is right for you, whether they are company growth, stability for employees, your financial position, customer experience, or any number of other factors. Exit strategy options include:

• Liquidation – Closing your business, selling assets, and paying debts. Any remaining profits goes to you as the former owner.
• Friendly buyout – Selling your business to a family member or close friend.
• Management buyout – Management-level employees purchase your business and step into executive leadership roles.
• Acquisition or third-party sale – Selling your company to an outside company, either known to you (like a competitor or vendor) or unknown (by advertising your business for sale more broadly).
• Depending on your company’s size, you may also consider an ESOP (Employee Stock Ownership Program) or IPO (Initial Public Offering). These approaches can be more complex, so it’s important to have a trusted financial and legal team around you.

Successor search

Once you’ve selected an exit strategy, you’ll need to identify a successor — or multiple successors. Start by looking within your business and close personal network. Consider key employees, family members, industry contacts, and anyone else who may be familiar with your business or the industry at large. If you are struggling to identify possible successors, consider connecting with your local chamber of commerce or other organizations for business leaders.

Create a list of all possible successors, then consider the benefits, drawbacks, and limiting factors for each option. Assess skills and experience, but also consider cultural alignment, leadership style, and alignment with your goals for your exit. ¹ During this time, and throughout your entire exit, communicate clearly and often with your successors and with all your employees. Reducing uncertainty for employees can help maintain morale and reduce turnover as you initiate your succession plan.  

Knowledge Transfer

Once you’ve selected a successor or group of successors, begin the process of transferring business knowledge. This includes process documentation and critical logistics. You should also document key business relationships and make introductions before your exit is complete.² This can help your business navigate the transition and ensure continuation of supplier or vendor relationships. The more you can document and share, the better. Processes that feel like second nature to you may not have started that way, so do what you can to set your successor up for a smooth takeover.

Making your exit

With the plans in place, it’s time to make your exit. Communicate your plan in detail internally and to key investors, then strategically tell your clients and customers. If you are closing your business, provide alternative options to meet the needs you were previously fulfilling. If the business will continue, make introductions to the new owner(s) – the same way you would thoughtfully transition a professional relationship.

As you navigate this major milestone, it may feel overwhelming to face a drastic shift to your day-to-day life — and your financial situation. Surround yourself with advisors and trusted partners who understand your needs and values. Need guidance as you start? Connect with your local business banking specialist. We’re by your side no matter where you are in the succession planning process.