In 2003, a respected and successful business owner that I know announced to his family and friends that he was going to sell his business in five years and retire. With some fanfare, he circled the date on a calendar, kissed his wife and smiled broadly.

Six months short of his deadline, he initiated a major shift in his business that just about killed him and his company.

Because of that impulsive decision he lost customers, salespeople and employees. He lost his health. He lost respect and dignity. He permanently damaged family relations. He nearly committed suicide. And he lost 75% of the value of his business over the next two years. That wasn’t what he had in mind at the time he circled the date. Unfortunately his plan to retire wasn’t really a plan. It was barely a good intention, probably stated aloud in order to appease his wife.

For some entrepreneurs, the thought of planning for transition and following through on a plan is painful. They started the business and regardless of how much it has grown or changed, it is still their ‘baby’. They imagined it, created it, nurtured it through tough times, and watched it grow. They are intimately connected with its daily ebb and flow. They can’t imagine what else they would do.

So why should entrepreneurs plan for their transition? Because it is their responsibility to do so and they are the only ones who can do it the way they want it done. Transition will happen in your business whether it is planned or not. In the above case, the owner still had to transition his business, but he did it under duress and in ill health, rather than with options, forethought and a clear mind.

If you don’t deal with succession for your business, who do you think will?

Now, let me share some interesting statistics:

• In a 2005 survey[1] 71% of entrepreneurs (most of whom are baby boomers) said they planned to retire in the next 10 years. The recession of 2008 pushed that out for many people, but it still means that in the next 3 to 5 years, millions of Canadian businesses will change hands.
• In the same survey, only 7% said they had a plan for transition.

This would suggest that many business owners are thinking about transitioning, but few are actually doing anything about it. Well, they better get started because another statistic suggests that most companies that are put up for sale are unable to find a suitable buyer. Only 1 in 5 companies will get sold. [2]

That’s a problem. A big problem. A problem that affects not only the owners, but also their families, employees, suppliers, customers and communities. That’s why I call it a crisis.

So if you have been procrastinating, here are eight steps to get you started on your plan:

1. Make time to decide what is most important to you and then set about to make it happen. Just get started!
2. Invest in and develop your employees, your leadership team and your salespeople. It makes it easier for you to delegate responsibilities and adds value to your business.
3. Position the right people in the right roles and get rid of the deadwood. Ask yourself, “If I were buying this business would this person be an asset or a liability?”
4. Strengthen your story of future potential by ensuring long term, happy clients and employees.
5. Get your balance sheet cleaned up.
6. Develop and document reproducible systems and processes that are consistently followed and proven to work.
7. Prepare yourself mentally for the transition. Visualize your ideal future.
8. Identify and cultivate relationships with key advisers who can provide guidance, advice and tools well in advance of when you think you need the help. The best strategies often require time to implement in order to achieve their greatest value.

As you can imagine, this all takes time. It can take several years and you still need to continue to run your business while you work on the transition process. Is it worth it? Absolutely!! The time you invest in this critical stage of your business will pay a higher ROI than just about any other activity you can imagine. Even relatively small businesses can reward their owner with thousands of dollars per hour for the effort made in developing and executing a transition plan. And the relationships, reputations, dignity and respect it preserves are priceless.