The following guest post is by Natashah Torki, COO and manager of Southern California’s hair removal studio Beauty By Dolly. Natashah is in charge of operations and expansion.
When people talk about business strategy, you hear about financing, brand extensions or partnerships. But what about the simple question of continuity? Many entrepreneurs have the vision to build and run a strong company, but fail to take key steps to secure the company’s future.
According to The U.S. Small Business Administration, nearly 70% of small business owners lack a real succession plan. Family-owned businesses, for example, may not feel the need to be formal – a huge mistake. My family’s business, Beauty By Dolly, was almost a victim of this mentality. My mother, Kashmira Torki, and aunt, Dolly Bakshai, founded our beauty studios on their passion for and expertise in the art of hair removal. When my aunt suffered a serious injury a year ago, we suddenly realized that we had no contingency plan. That’s exactly what a succession plan is: a formal plan to outline who will take over your business and how it will run once you’ve exited the company. A succession plan is something every strategic business should have, and should be written and set aside long before you need it.
Know Why You Are Planning Now
By keeping in mind why you are drafting your plan, decision-making becomes more efficient. Like writing a will, it may be an uncomfortable exercise, but is necessary to ensure that your business will proceed in line with your goals. When my aunt was injured, it was a wakeup call. We weren’t adequately prepared for such a situation. Although we were running a successful business, we hadn’t considered what the future could and would bring. Our family members’ livelihoods and retirements were at stake if we continued to focus solely on the day to day.
So consider: what is the goal for your succession plan? Perhaps you want to keep it in the family, or maybe you want someone who can take the brand international. Knowing your priorities will guide you to answer key questions for the plan: Who can keep the business truest to your values? Will you require your successor to adhere to a buy-sell agreement? What has to happen for the business to continue being a success?
Treat The Family Business As What It Is: Business
When I first expressed interest in taking over Beauty By Dolly, my mother, aunt and I first tried to sort things out on our own. It didn’t work – emotions ran high and it was hard to separate our personal feelings and preferences from what would be healthiest for the business. We realized we needed to handle it as a formal business conversation, and that we needed help. Professional advisors provided a crucial buffer and the experienced, objective insight we’d been missing.
Hire People Smarter And More Knowledgeable Than Yourself
Involve the right people in drafting your plan. Lean on the expertise of those who can round out your strengths and help you get where you want to go. Succession planning creates a structure to put the right players and training in place for your company’s legacy to continue. After choosing a successor, include them in the drafting conversation, along with experienced professionals who understand the challenges of succession planning best, specifically:
- A business advisor with experience in succession planning; who knows the important details to consider and can give you solid, positive advice
- A lawyer to provide proper legal structure to the plan, so you do it right the first time
- A Certified Public Accountant who can give you factual numbers
In our case, the CPA helped us analyze what was happening financially with the business and where money was draining unnecessarily. By discovering any weaknesses in our financial foundation, we were able to understand the true financial health of our business and how to strengthen it during the succession period. Having professional advisors took a tremendous amount of stress off our shoulders and allowed me to be mentored in areas I felt unsure about.
Set Succession Plan Goals Together
Current leadership and the future successor should set shared goals for the future of the business. Evaluate what could have been done better in the past, then strategize as a team to decide how the plan can address this.
When we began preparing the succession plan for the Beauty By Dolly, my mother and aunt decided they wanted someone who would aggressively shift a local company to a national brand. As the successor, we determined that I would be responsible for upholding our core branding, expanding the offerings of our product line and distribution, and implementing processes to improve our business efficiency. Although at first some of the decisions we made contradicted the small, community-based business that Beauty By Dolly had been under my mother and aunt, those judgment calls have enabled us to reach a worldwide audience. The succession plan outlined goals that have now brought my family’s skills to more clients that we could have ever imagined, even garnering international acclaim in the beauty magazine, InStyle.
Don’t Delay Writing It!
A succession plan, simply put, is the only way to ensure that your business won’t suffer when circumstances change – and they will. Write your succession plan long before you need it, so when the time comes to act, the terms are already laid out and agreed to. The time to discuss the future is not when crisis is already in motion.
Having a succession plan in place is one of the best things we have done for our business. Now there is no doubt as to who will step in to lead the company when the time comes; giving us an additional sense of security as we move through each day as a team. Remember: Having a succession plan isn’t about perfection – it’s about having one, period. Give yourself peace of mind by creating a succession plan, and use it to firmly cement the business legacy you’ve worked so hard to create.
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