Business succession tends to attract a lot of myths and misconceptions. Here we explore the truth behind five common myths.
Myth 1: Succession planning is a one-off.
Many owners treat succession planning like something you do once and then file away out of mind. In reality, effective succession planning is a continuous process that changes with the business. A plan written five years ago may not reflect your current financial performance or tax conditions.
Myth 2: Internal successors are the best choice.
Promoting from within can seem like the best choice, but internal candidates may lack the experience, capital access, or objectivity needed to drive your company’s growth, while external successors sometimes bring fresh industry knowledge and new networks.
Myth 3: It’s easier to just sell.
Selling sounds like the easiest choice, yet can take years and involve valuation disputes, regulatory reviews, and an awful lot of stress! Many deals fall through during due diligence. Preparing a company for sale requires incredibly clean financial records and stable revenue streams.
Myth 4: Giving up ownership means giving up control.
Giving up ownership doesn’t always require a total exit. Agreements can allow founders to keep on advisory roles, maybe phased equity stakes, or income through dividends.
Evesham accountants such as randall-payne.co.uk/services/accountancy/evesham-accountants/, will be able to help you devise the best way forward.
Myth 5: Succession planning should start when I’m ready to retire.
Waiting until retirement is close is one of the riskiest approaches an owner can take, because succession planning works best when it starts years in advance.