Succession Planning — Passing the Baton

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Eventually, every rep firm owner will leave the business. A well-thought-out succession plan is essential to all rep agencies no matter what their size and structure. If no planning is done, lawyers and the government will quickly take control. But if an agent plans an orderly transfer, he or she can reduce legal conflicts and required taxes, pull maximum personal financial returns, and see the business prosper and grow in the hands of chosen successors.

Unfortunately, as good as our members are at starting and growing businesses, I hear rep after rep dismiss the thought of succession planning as ‘not relevant’ to them. “Oh, I’m just a one- or two-person agency” or “I don’t have the time/money/interest to find a replacement.” All too often the result is an advertisement in Agency Sales magazine that reads, “Ready to retire this year; who wants to buy my agency?”

Succession planning is not easy, nor does it come quickly. As I write this editorial, I am in the midst of working out my own succession plan. I can tell you — it does take time and effort, as well as qualified outside legal and financial planning assistance. For these reasons it is widely recommended that you start planning three to five years in advance of your retirement date. (See the article on exit planning in January 2008, Agency Sales.)

I am sure you will find, as I did, that a strategized, well-executed succession process benefits everyone:

A smooth transition with continued sales support and growth for your employees and principals.
Financial reward for you and your family.
Continued growth of the manufacturers’ rep industry.
Opportunities for tomorrow’s entrepreneurs to learn and purchase proven businesses.

The May, 2005 issue of Inc. magazine projected that, over the next 10 years, one out of two company owners will sell their businesses. We literally have a business transition “tsunami” taking place. However, as a member of MANA, you have multiple succession planning resources:

Personal counseling.
Seminars and webinars.
Free succession planning brochures and article reprints.