Your Company: The Next Generation
An exit strategy isn’t just for those thinking about retirement. What happens if the business owner — due to an unforeseen life event — is suddenly unable to carry out his or her responsibilities? Less tragically, some business owners may begin to feel their talents are better applied to a new venture, requiring successors to take over their existing posts.
The good news is that succession planning is closely linked with growth management.
“The things that you need in place for a transition to a successor are the things that you need to operate a good business: a solid technology base with good software, the processing of solid reporting and quality personnel,” says Debra Ellis, president of Wilson & Ellis Consulting, a catalog/multichannel consulting firm.
All in Your Head
“What’s so prevalent with many businesses is that the entrepreneurs have everything in their heads, and they have not put it down in any kind of systematic form so anyone else can make use of it,” says Bill Sornstein, principal at Succession Strategies, a consultancy that works with family-owned businesses. This information should be documented. Develop best practices so proper systems can be implemented for eventual successors to use.
Last June, technology distribution giant Ingram Micro Inc. acquired privately held B-to-B consumer electronics cataloger DBL Distributing. Bruce Kuperman, DBL’s senior vice president of sales, remained with the company and was close to the deal. He recounts that founder and former president and CEO David Lorsch — whose initials still comprise the company name — and his management team began working on a succession strategy well before inking the agreement.
“As the business continued to grow, we said that we needed to have some kind of succession plan should something happen to David,” Kuperman says. “We needed to put things in place so that even as we continued to grow and become a bigger company, the outside world would see that we had a game plan.”