People often ask me when they should start thinking about succession. I have two answers for that:
1. Emergency succession you should always be thinking about. This is the whole discussion around what would happen to my business if something happened to me question.
2. Planned succession has stages. You should have thought about the question whether you were “building a business to sell”, at the start of your business, or sometime soon after the start of your business. If you don’t have a business that you are selling, then you are only concerned with the sale of assets in your business when you stop operating it. You are not really concerned about succession.
If you have a business that you can sell. Then 5 years from the time you want to sell it, you should consider who would buy it, what is it worth, all of the stuff we have been talking about in this series of recommendations.
Once you are within the five year window, then each year you should do a simple valuation, see if the value of your business is increasing, and think about who might buy the business.
The year you plan to sell, you move into full succession mode.