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A JOINT VENTURE WITH BDC Insight: Proactive approach to succession
Planning for the future is key to the success of any business. "Having a very clear transition strategy and having it in place early goes a long way toward ensuring success," says Peter Lawler, senior vice-president of financing and consulting for the Business Development Bank of Canada.
A company without a clear plan is in a vulnerable position, he says. "Not all business owners may have a formal transition plan ready to execute. Then a triggering event forces the issue before the business is ready to move forward."
The importance of a proactive approach to succession is demonstrated by the experience of the Naylor Group.
"The first thing business owners need to do is to clarify both their business objectives and their personal goals," Lawler says. "They have to have a clear understanding of both to develop a succession plan."
This involves understanding and meeting the needs of all the stakeholders and allowing for a lot of lead time to plan and execute -- realistically, at least two years. Successful business transitions take much longer than entrepreneurs realize. As they project their vision of their company into the future, entrepreneurs must evaluate the current management team's strengths and weaknesses.
"It's important to look at the roles and responsibilities of all the individuals involved and determine if they can take the business where it needs to go," Lawler says. "This is where bringing in outside advisers to set up a transition team can help. A higher degree of sophistication and different skill sets may be required as an organization grows from a family business to a larger entity. There are nearly always bumps along the road, so outside professional management can guide you through the various steps of the process and help smooth the way."
The focal point of any succession strategy lies in understanding the business and being willing to make the changes required for a successful transition to new ownership.
Lawler notes the plan may include a period of co-management to ensure a proper transfer of knowledge to the new generation of leaders.
Whatever the details, having sufficient time to carry out the plan is crucial.
"The most successful transitions are those that are well thought out and have a sufficiently broad time frame to allow for success," he says.
"Don't wait for an event that forces the transition before people are prepared."
-- Postmedia News
Republished from the Winnipeg Free Press print edition February 12, 2013 B5
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