Running a retail business requires flexibility, ingenuity, dedication, and hard work. With the responsibility of day to day operations, it is easy to become overwhelmed and consumed with your business. However, one of the keys to long-term survival and ensuring your business is successful is planning for the future. Succession planning can and should start years before you think about transitioning your business. Shelli Ulrich, Global Customer Experience Leader for Wells Fargo Commercial Distribution FinanceTM (CDF), shares her insight on why succession planning is important and how to start preparing early.
One of the most important questions business owners can ask themselves is whether they, as owners or managers, are one of their company’s most valuable assets
Succession planning should be seen as more than just a change in leadership or the sale of a business. It is important to remember that your business’s overall morale is deeply rooted in the business practices you have established as an owner or manager. All of your experiences and the lessons you have learned as a leader are no longer involved in the company or at least not in such an impactful role as they are today. So, what does this all mean?
Your business may rely heavily on your leadership and business experience, your decision making skills, key individuals that have been with you for years along the way, or a combination of each. It is also important to make time to share your experiences with others and give potential successors or managers a chance to grow and learn on their own. Your experience as a manager or owner could all be lost at the time of a sale or transition, which could have an impact on your potential business value as well as the long-term success of the company.
To help assess where you are, you can start by considering the following questions:
- If you unexpectedly walked out of your business tonight and didn’t come back for 6 months, what would happen?
- Would your customers and/or employees have a consistent quality experience and remain loyal?
- Would your suppliers and bills be paid on time?
- Would your revenue remain steady or grow?
- Would your inventory levels be sufficient?
- How about your books, records and accounting systems? Would they be intact?
It’s often challenging to take a step back and candidly evaluate your business from an unbiased perspective. However, it is important to understand the value of your business as well as to better ensure the long-term success of your company. Understanding your business is about processes, systems, employees, customers, and your company’s culture. By starting early with a willingness to look at your company from the outside, you can properly assess your strengths and weaknesses including systems, processes, culture, training, and marketing.
This exercise takes time but will help ensure that your business’s value is not dependent on a single person or small group of people or antiquated systems, and is instead a valuable business entity that is well positioned to succeed regardless of the owner. It also is a great opportunity to drive a common vision, better engage all employees, and will often increase the business value your company has to any type of buyer (internal, family or a 3rd party). Succession planning does not only put your business in the best position possible for the future, but also increases the chances for your business’s vision and values to carry over.
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Wells Fargo Commercial Distribution FinanceTM is the trade name in the United States and a trademark in Canada for certain inventory financing (floor planning) services of Wells Fargo & Company and its subsidiaries including Wells Fargo Capital Finance Corporation Canada.
The opinions expressed in this document are general in nature and not intended to provide specific advice or recommendations for any individual or association. Contact your banker, lawyer, accountant or tax advisor with regard to your individual situation. The opinions of the author do not necessarily reflect those of Wells Fargo Commercial Distribution FinanceTM or any Wells Fargo entity.