Do you need a succession plan for your accommodation business?
The Baby Boomer generation is retiring in large numbers, so new leaders are needed. If you want your own retirement planning to go as smoothly as possible, you should plan a profitable exit strategy long before you think you might leave or list your accommodation business for sale.
What is succession planning?
Succession planning is the best way to prepare for the day when you choose to leave or sell your accommodation business. It involves making an exit strategy for handing over leadership roles or even the ownership of the business so it can continue to run smoothly once you decide to leave.
There are a number of reasons why business owners fail to make succession plans, including:
- Thinking they don’t need an exit strategy
- Thinking they don’t have time to make one
- Thinking the value of the business is what they currently earn
- Thinking a good growth strategy is sufficient planning
However, all of these are myths. Succession planning for a small business is vital as your team may be small and you have probably been handling most of the major responsibilities yourself. So if you have a motel, caravan park or management rights business for sale, or you’re ready to retire, succession planning is the only way to ensure a smooth transition.
How succession planning works
In a succession plan, you decide who you want to hand your business over to when you leave, and who you think would be the best people to take over the key responsibilities.
You will also have to decide whether or not you want to retain a stake in the business so you can continue to make some money from it, or whether you want to list your caravan park or motel for sale.
The key benefits of making a plan
Having a properly-formulated exit strategy has a number of key benefits for you as a small business owner:
- It keeps your employees happier and more loyal as they know there are opportunities for career progression.
- It gives you a clear picture of the skills of your team, enabling you to identify any gaps.
- It ensures knowledge and experience are transferred from the leadership to employees.
- It makes the rest of your retirement planning easier and less stressful.
Developing a plan
You have a number of options when it comes to deciding on your successors. You can choose to pass the business on to a family member or business partner, train and promote existing employees, or recruit new key personnel from outside the business.
It is important to consider the emotional, practical, legal and financial implications of each of these before making a decision.
Three key stages of succession planning
1. Forming the strategy
Successful succession planning for a small business isn’t a quick process – it can take years, so it is important to start long before you’re thinking about leaving.
2. Preparing your motel, caravan park or management rights business for sale
You need to ensure all your financial data is in order and your staff are fully trained. You should also aim to increase the value of your business by identifying its strengths and making them even better.
3. Selling your business
Make sure you have the right professional advice, including from an experienced lawyer and specialist business broker.
If you would like more help and advice on this topic, please contact the team here at Accommodation Business Brokers, and we will be happy to help.