Let’s start with the definition of “Succession Planning.” The one that I choose is simple:

Succession Planning is the strategic process that safely enables an orderly and appropriate transition of the control and ownership of a successful business from one party to another.

Within this definition, there are a lot of variables but notice that the whole concept rests on a single term, Success. The very phrase evokes the notion that the end result will be a successful, vibrant business on the other side of a chain of events and that will always, ultimately, be the goal of sound planning. Despite all of the potential risks, the goal of a sound succession plan should be to deliver the business through change to a new and better future.

How “successful” is this concept in today’s world? Well, not very. Statistics vary, but it is commonly shared that less than 30% of businesses survive to the second generation and less than 15% make it to the third. While that makes the tenure of companies like Zildjian Cymbals (14 generations and still going) and Bacardi (sixth generation), amazing, it does not give others much hope. There are a handful of truly successful, multi-generational companies in existence in our country out of the 21,000,000+ businesses that exist.

Why do so many companies fail in their efforts for longevity and evolution? Obvious answers could be market climate, obsolescence and mismanagement. However, I would postulate that many companies simply failed to plan adequately for the future – a future in which their products may change, their markets may change and their leadership may change. Succession planning is far more than simply paying an attorney to draft a buy-sell document to be stored in a drawer until someone dies. Succession planning incorporates every vital process of a company, from recruiting employees to providing the best end result with products or services. Cash flow, education, empowerment and direction all play a role in the ultimate success of a company’s long range plans. Succession planning is an exciting, ongoing exercise in guiding and directing the future of the enterprise.

Sounds daunting, right? Now you understand why so many companies avoid beginning the process of succession planning altogether. There are always more urgent issues pressing than coming up with a ten year strategy of where I want my company to be so that I can retire. Can I make payroll this week? Will my largest account be stolen by that new, national competitor? Why does it seem that my old delivery van needs another oil change again this week?

Additionally, I can comfortably sit around my dinner table, watching my children grow, and never give a thought to which one of those budding adults will run my operations one day – heck, my kids are all under 14 anyway. There’s time for that. I am just sure ONE of them will want to work for me as their overbearing boss for years before they finally wrench away the control of the company from my senile hands, right? Oh, yeah, and they’ll all get along like best friends forever, right? The path of life teaches everyone harsh lessons at times and business owners are certainly not immune to these lessons. Succession planning usually doesn’t begin until very late in the career of a business owner and is usually prompted by some life event – last child moves out, maybe a serious health scare or a divorce being three of the most popular. Waiting until this point is much like watching the sands run out of an hourglass in a game – with each grain’s departure, the options become fewer, the stress level rises and the predicted level of success becomes more faint.

I have sat at the Thanksgiving table across from the sister that I had recently fired. I have made payroll by the narrowest of margins and wondered how I would ever do it again. I have signed my name to one more loan, stretching my personal guarantees so thin you could see through them. Through all of that and more, I have learned and begun to implement a better way for my clients.

The Legacy Succession System was created to lead business owners through the succession planning process. Please note that the word is “leading” and not any other variation on the theme. This can be the hardest part of the process – the beginning – as every business owner I have ever met has a hard time “following” where someone else leads. We are uniquely positioned at CPS to lead our clients through this process because of our background. Very few other advisors in this field can prove that they are both owner and consultant. We bring a depth of understanding to the table that is unmatched in our industry. In addition, CPS is constantly improving its knowledge base and relationships with other advisors so we can bring to our clients timely, sound solutions that will withstand the scrutiny that can be brought to bear when a crisis arises.