I spoke recently at the International Baking Industry Exposition in Las Vegas on the subject of succession planning. This is a hot topic in the baking industry as it strives to get the next generation into the business and the current generation out gracefully. As you probably know, this challenge is really universal now as 79% of business owners indicate they are planning on exiting the business in the next 10 years. The baby boomers are retiring. So far no surprises here right? Perhaps the total number is surprising or the portion of businesses that they own is surprising, but we’ve been following this generation for some time and as I said in an eponymous monograph on the same subject; “Everybody Exits.”

What is a little surprising is that so few of them have planned for it. Only 17% of ALL businesses have a written succession plan.

And of course, having a plan doesn’t mean it’s complete. There are a lot of facets to a thorough transition or succession plan:

Ownership transition
- Estate planning
- Structuring the transaction
- Triggering events
- Potentially financing
- Tax treatment
Leadership transition
- Separation (or not) of leadership and ownership
- Talent assessment
- Leader development plan (education, experiences, coaching, peers, etc.) This can take 5 years or more if the candidate is starting from scratch in their preparation.
- Backfill and development of the rest of the team
- Role of board and outside advisors
Cultural transition (this is often neglected in generational transitions but highly impactful for better or worse)
- Assess what changes are needed and likely to occur
- Prepare a plan to guide the cultural development of the business across this transition
- Prepare the stewards of that transition for their role in it
Plan B for the unexpected exit
- Alternative arrangements for an unplanned event
- Role of board and outside advisors
- Temporary leadership if primary is not prepared at time of transition

These are just headline items of course, but when you begin peeling the onion, like ogres, succession has many layers.

Remember, just because you plan how to handle an event, doesn’t mean you’re accelerating the event or causing it to happen. The truth is, all owners exit their businesses. Some exit with a plan and a team that has been developed to handle this transition smoothly, and some leave their teams and create a crisis, which was avoidable with planning.

Call To Action

This is simple, if your business doesn’t have a written succession plan that includes development of the next generation and a Plan B, you should put one in place.

Assess the condition of the business.
Determine the likely disposition. This may change over time, but since we don’t know when this will occur, there needs to be a default in place immediately.
Put a talent development plan in place, not just for the next leader, but for the entire talent base.
Put Plan B in place in case the transition is an unplanned one.

Here’s the link to my blog: Everybody Exits. Additionally, you can read more about this topic in LBM Journal’s article on succession planning titled “Real Issues. Real Answers. The boomer brain drain.”