Why are succession plans important?
Whenever a business owner sets out to grow their company, there are certain aspects of setting up the business that are critical, from a business plan to working capital. And yet, there is one oft-overlooked aspect: the succession plan. Business succession planning is a critical aspect of operating a successful business, especially for entrepreneurs nearing retirement or those who want to sell their company.
By making a business succession plan early, business owners will ensure a smooth transition once the time comes. This helps to minimize any negative effects and create a positive atmosphere once the time comes to sell. The question is, what factors should be considered when creating a business succession plan?
1. Will the Business Continue?
Here at Pluribus Technologies, we acquire businesses intending to see them not only continue, but grow. Still, some business owners choose to liquidate their assets and close the business when they are no longer involved. We look for companies that wish for the company to continue after they are gone. That's why one of the most important decisions is choosing a successor.
2. Choosing a Successor
A successor is often chosen by appointing a family member, employee, or other individual or entity to take the owner's place. In our case, we offer a dedicated team and a concentrated network of companies that each help each other grow. For instance, we have found ways to combine companies we acquired that operate in the eLearning space into The Learning Network, which focuses on eLearning in all of its facets, from content creation to video production and more.
3. Spurring Intracompany Communication
Many employees within a company may view a succession plan as something to be afraid of, and yet that doesn't need to be the case. Succession plans are all about laying the groundwork for the future, so it isn't unheard of for companies to involve the heads of every department or other members of the organization to discuss the plan. Not only does this help alleviate stress related to the plan, but it also gets people communicating across departments and helps streamline goals and long-term plans. This communication is key. When we brought companies like ICOM Productions and Logic Bay on board, it was thorough communication that helped find the synergies to bring them under The Learning Network's umbrella.
4. Keeping Staff Motivated
This may seem counterintuitive, but putting a succession plan in place, or accepting one from a worthy buyer, can actually motivate your employees and send a positive message to your staff. At Pluribus Technologies, our goal in acquiring new businesses is to ensure their employees feel secure that their jobs are safe. They want to know that whomever their new parent company is will develop staff members and create a culture to build on future leadership positions. By demonstrating your dedication to stability and internal promotion, you can increase your staff’s confidence in the company and motivate them to give their best effort.
5. Succession Planning Can Save Money in the Long-Run
Companies that aren't prepared to be acquired might risk incurring significant losses. Searching for a buyer or replacement leader can be a costly endeavor. The merging process costs money from a regulatory and taxation standpoint. And even if there are no surprises that arise from a leadership vacancy, a documented succession plan can save costs associated with hiring outside people for certain roles.
Here at Pluribus Technologies, our goal is to acquire technology companies looking for a succession plan. We provide business leaders with a way to leverage our deep operational experience to ensure their businesses endure while providing them with a desirable exit plan. When it comes to succession plans, Pluribus Technologies operates in a space all its own.