In its recent Succession Tsunami report, the Canadian Federation of Independent Business (CFIB) said that 76% of business owners plan to exit their businesses within 10 years.
Reasons for moving on:
– Retirement: 75%
– Stress & burnout: 22%
For many owners, the proceeds from the sale of their business needs to fund their retirement (!).
However:
– only 9% have a formal succession plan in place.
– 54% has trouble finding a suitable buyer or successor.
– 43% are struggling to measure the value of their business
– 39% says the business is too reliant on them for day-to-day operations.
No surprises for me here.
Many of the businesses I work with rely significantly on the owner being there each and every day: they work IN the business, not ON the business.
Businesses like these are hard to sell: potential buyers realize they won’t be able to run the company. And many of the ones that do sell fail within 6 months.
So what are some of the things we do about this?
– Create a vision for a future state of the company (and for the owner personally)
– Develop a clear organizational structure that supports the vision
– Develop a strong management team, with clearly defined Accountabilities
– Implement well-defined Systems & Processes
The desired outcome is to have a Management Team and Workforce that has the Authority and Knowledge to run the business by itself.
I often joke to the owner: “my job is to get you out of the business and on to the golf course”.
Does this work? Absolutely! Like my client Enrique: he went on a great trip some time ago, came back, checked in with his team, no problems reported, went on doing his thing. Would he have been able to do this 2 years ago? Not a chance (his own words).