There are two key components of perpetuation planning, which are the human capital component and the financial component. Both need to go hand in hand if your perpetuation plan is to be a success. You cannot satisfy the financial component only, and then not have the right people in place to move the business forward in the future. With that in mind, in this post, we are going to take a look at the five key steps you need to take when it comes to successful perpetuation planning.
Identify the end goal – The first step is to identify the end goal. What do you aim to achieve? This could be something as simple as selling your business to a family member, key employee or a peer. It could be something a bit more complicated, as you may want to split the company up into different segments, selling each individually. Or, perhaps, you want to look outside of your firm for a successor? There is no right or wrong approach, but it is important to have an end goal in mind so that you can base your plan around it.
The right type of person – Once you have done this, you need to decipher the right kind of person for a successful perpetuation. Who should be stepping into your shoes? You need to consider factors such as willingness to follow through on promises made, shared vision, character, background and experience.
Attracting the right person – Now that you are aware of the type of character you need, you then need to attract this type of person by having the right process in place. Approach internal candidates about the role and the long-term plan, if this is indeed the direction you want to go down. Otherwise, you need to go into the marketplace yourself or hire someone else to do so if you do not have any internal candidates. You will need to conduct significant market research. It is a good idea to hire an external consultant that has substantial experience in your niche, as they will be able to identify potential candidates and they will know how to attract them and how much it is going to cost.
Set trigger points, milestones and target dates – A perpetuation plan should not have one final end date; it should be split into target dates and milestones. This is important because no one likes uncertainty. You and your successor should both agree on specific goals, and then, of course, you need to accomplish them.
Make sure everything is in writing – Last but not least, but everything in writing. There is no such thing as a perpetuation plan if it is not documented down in the written word. You can’t simply agree on something as big as this via word of mouth. No one wants to feel like they are being taken advantage of, and having everything laid out clearly will ensure that there are no crossed wires.