Where did the town I grew up in go? Where did the services that I depended on go? Is that going to happen to every community? What can I do to prevent that?
I came from a rural community in Saskatchewan where we lived on a farm. We lived less than a mile to the local town where there were a number of businesses that supported the rural community. I watched and over a time frame those services that were so critical to life in a rural community slowly began to fold and were absorbed by the larger service providers in communities’ miles away from our home. So why was that?
When I look back, I see that we did not do any succession planning with the idea in mind of keeping those services alive in their original community. Business people shut the doors and moved to the larger centres leaving behind those that had depended on their services for years. You could say that we adjusted to the change and drove the added miles to acquire those services, but did we have to?
Succession planning would have assisted those businesses in extending their longevity in the community. When I look at the family owned businesses of which there are many, or the small to medium businesses of which there are many I see a huge void in having a succession plan in place. For some this is a daunting task, but it does not need to be. There are people that can assist you through that process and help you figure out who would be a successor.
So what might some of your options be? Let’s take a few moments to look at some of those options and what each means.
Typically the first option for succession planning in a family owned business would be to mentor one of the immediate family members into the role of taking over the business. This would require some forward thinking and also the assurance that the family member would want to take on this challenge. You would want to put a program in place to ensure that they learn the business and how to manage the business. You may want to look at bringing in an outside person to mentor them through the process in addition to you as the current owner. Having an independent sounding board is of great value to our future leaders of tomorrow.
The second option for succession planning that we can look at is one where you find an entrepreneur that is interested in buying a business that already is established with a solid clientele. This approach may be the best one for you if you have not planned for succession and are faced with some quick business decisions on how to keep your business alive. You should be cautious however that you use prudent business sense and make sure that the price you settle on is one that you are comfortable with. Entrepreneurs will want a valuation done on your business to support their investment decision.
The third option for succession planning that we can look at is one that involves locating an immigrant entrepreneur that wishes to buy an established business here in Canada and move his family here. There are Immigrant Nominee Programs in place in most Provinces in Canada to support this type of transaction. There is some additional foot work that is required to make this type of option work, but it is still a viable option for you to consider. I would recommend if you are thinking of this type of option that you begin the planning process now.
The fourth option for succession planning that we can look at is one that involves Government sponsored investment programs in the jurisdiction that you live in. An example of this is a program that provides opportunities for employees to buy into the company and receive tax credits for doing so. There will obviously be some restrictions on the size of the company and the amount of annual investment but this may be a viable option for you as well. You would want to look at this approach carefully though, as you still need to determine who is going to own the company.
The fifth option for succession planning that we can look at is one that we need to focus on more often as it provides opportunities for our future leaders of tomorrow. This option looks at the concept of bringing youth into the company in a management training role and mentoring them. There are a number of approaches that we can take with this option that provides a solid approach to your succession plan.
All of these options are part of the succession planning process that we use to ensure that your business and your community continue to prosper and grow for years to come.
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