It’s a tragic and familiar story: rags to riches to rags in three generations. Shirtsleeves to shirtsleeves. This is part three in a series that explains why wealth and success often fade across generations. If you haven’t read parts one or two yet, you can find them here and here.
In addition to the first-generation wealth creator mindset being diluted over time, and the importance of maintaining a positive emotional connection with work and the family business, one more element determines whether the story continues or ends: a clear succession plan.
Memento Mori. Remember you will die. Or retire. Or burn out. Or decide you’d rather knit quilts in a cabin in the woods while watching deer outside the window. However your career ends, your business should not end with it. A solid succession plan ensures your work outlives your role in it.
A good business plan includes an exit strategy. That means you should think about succession long before you’re ready to step away. If your intention is to pass the business on to your children, they need to be confident of a few things:
What Your Children Need to Know
- That you won’t disappear before they’ve learned to run the business
- That real ownership and responsibility come with the work they put in
- That the business is not just a job but a vehicle for the kind of life they want
- That you actually enjoy what you do, because otherwise, why pass it on?
- And that their ideas will be heard as they gain experience and competence
When you let the next generation improve the systems, serve customers better, and refine operations, you make room for the business to evolve instead of stagnate.
The Operator for the New Owners
If you plan to sell the business outside the family, decide what matters most: the highest price or preserving your legacy. Do your employees know how to take on leadership roles with greater responsibility and pay? Who among them values the business the most? That person could become the new owner or operator. If your children still want to own the company but need help running it, a trusted operator might bridge the gap between your vision and theirs.
The people you choose matter. Look for those who can manage and grow the business without you, who have integrity, and who share your values. That’s how you turn an ending into continuity.
Now that you’ve identified someone—either a family member or an outside operator—who can take the reins, you’ve already extended the lifespan of your business. Teach them to do the same. From day one, the succession plan begins.
And here’s where bookkeeping for business succession planning becomes practical. Your bookkeeper can’t teach your successor everything about your trade, but they can teach them how to read financial statements and understand the story behind the numbers. While you pass on your knowledge of operations and strategy, your bookkeeper helps them track cash flow, margins, and performance.
With me as your bookkeeper, you’ll save more than 80 hours a year compared to doing it yourself, and you’ll have clear, organized records that make any transition smoother. Whether you’re planning to pass the business down or prepare it for sale, your books are the backbone of that plan.
Schedule a call with me to talk about bookkeeping for business succession planning and how to prepare your business for the next chapter.