This may be fine to ask in many life situations but not with regard to your business. With an estimated 1.4M business owners retiring over the next 10 years, it is more important than ever to ensure your exit is planned and in place. And when is the best time to plan for your exit…before you enter or start your business.

The problem is too many business owners associate succession, and planning for it, with retirement only and therefore don’t give it enough priority as they ‘have time’. But succession could also be related to a sell down of equity, disability, sickness or death. A lot of which business owners cannot control but they can be ready.

We recently held a seminar on succession planning with experts presenting on the topic as well as clients that have been through various forms of succession including generational change, a management buy out and private equity participation. There were many great points made and tips given to maximise your value and a successful and seamless transition but three key considerations in my opinion that would assist with any succession plan I have outlined below.

1. Succession is a journey rather than a transaction

What this means is if you want to optimise your succession and everything that goes with it then allow yourself time. You will not get everything right or make the right decision first time but by allowing time you can work around issues, bring people along, establish processes etc.

2. Include the whole family in the planning

It is good practice to include family members in your succession planning. Generally blood family members are included but that is not the whole family. Spouses should also be included as they often have the same amount of influence, and sometimes more, over these decisions especially when a gain or loss is at stake.

3. Be very careful and comfortable who you are getting into bed with

Before bringing someone into ownership in your business make sure you truly understand who they are, what they are motivated by and that they are proven over time. It is easier to incentivise someone without ownership whilst you get comfortable and admit them at a later point than bringing someone in and realising you have made the wrong decision.

If your business is one of the 8% of Australian businesses with a succession plan in place, congratulations. If you fit into the 92% category then ask yourself is your business ‘exit ready’ regardless of retirement? No…then do something about it NOW for your best result later.