Good advice with Carole White

Dec 3 2007 by Iain Laing, The Journal

SUCCESSION planning is a key concern for a growing number of businesses across the region. There is significant support for starting up in business, but how do you get out? How do you pass the baton effectively?

The effective transition of business ownership can potentially drive productivity through increases in innovation, investment and skills.

It is estimated that around one-third of all EU firms are expected to change hands over the next decade, affecting around 610,000 small and medium-sized enterprises (SME) and two and a half million jobs.

One-third of UK SME owners have been identified as vulnerable to age-related transfer failure, and this vulnerability affects an increasing proportion of the SME owners.

It appears that small businesses are at greater risk of business transfer failure than bigger ones as they are often less likely to plan effectively or to consider and develop potential successors.

Overcoming this barrier can provide a way to revive the entrepreneurial and innovative energy that led to the business being created in the first place.

Key to the whole process is the initial realisation and analysis, focusing on the particular issues for your business. This will include not only business-related matters, but also the social, psychological and, where relevant, family politics which are all potential obstacles to business growth.

This process can really re-energise the business, protecting the core, and may enable those potential successors with entrepreneurial capability to explore and develop new strands of the business.

There may be some very tough decisions to make, with some owner-managers having to face up to the fact that the inhibitor in their business is actually themselves.

Strategies should be put in place to identify potential successors, perhaps within existing resources.

A development plan should be drawn up to support the potential successor(s) and, crucially, the team around them. This plan should be within the framework of the short, medium and long-term business plan.

Implementing this type of strategy can save a lot of heartache in the longer term. The process will never be an easy one, but perhaps you can earn yourself more time on the golf course without having to act as a referee back on the shop floor!

For support or advice, call Tedco on (0191) 428 3300, e-mail starting@tedco.org or visit www.tedco.org