If someone were to walk in to your office and place a huge stick of dynamite in your reception area and then tell you that it was guaranteed to explode sometime in the next 40 or 50 years, what would you do?
You’d likely call the police, try to get the explosive out of your office, try to track down the culprit—but there’s one thing I can promise you: You won’t simply ignore it.
Yet, many business owners do choose to ignore a “ticking time bomb” of their own. The reality is that every company, at some point, is going to go through a period of succession. It may be because the owner gets sick or dies. It may be because he or she decides to take an early retirement. It may be because the current owner is no longer capable of effective leadership. Whatever the cause, it will happen – that’s a guarantee.
Yet, most business owners fail to address this reality. New Zealand’s Business Day examines this trend, referring specifically to businesses in New Zealand. But I can assure you, business owners here in the US have the same attitude:
Kiwi companies are poor at succession planning, says a new survey that showed more than half of company executives were ill-prepared for the business to operate without them.
A survey by Board Dynamics found that almost 20 per cent of New Zealand businesses would be forced to shut down immediately if the head was struck down by illness or death. About 30 per cent could function for a few months before having to close.
Ernst & Young tax partner Jo Doolan said succession planning was absolutely critical.
“Some business owners just don’t actually think it through enough and they also expect that the heir-elect will have the necessary skills … People don’t want to look at their own vulnerability, the fact they might die.
“They really should…..