Pro Tip

How to Plan for Succession

Photography: Shutterstock / Dima Sidelnikov.

In a recent study published by farm‑, it would appear that more and more dealer‑principals are retiring in the next 5 years.

by Anne Salemo / CEO, Charter Software

This figure aligns with data that suggests 75% of people holding this job title are ages 51 and over. If you fall into either or both of these groups, you’ll need to begin planning your succession as soon as possible. Here’s how:

Preparing Your Finances
It should come as no surprise to you that the earlier you begin planning for retirement the better. According to MarketWatch, more than 40% of Americans that plan to retire are at risk of having $10,000 or less in savings for their twilight years. There are a variety of contributing factors, such as slow income growth, growing medical expenses, and using retirement funds as a stop gap for emergencies without concrete plans to replenish those accounts. Being able to find and anticipate the weaknesses in your current financial strategy will help you choose the right successor.

Outline Options for Successors

Consider the following scenarios:

  • If you were forced to retire early, who would you choose to be your successor?
  • If everything goes according to plan, who would you like to take over your role if you retire on time? Is this the same person from the previous question?
  • Would your replacement buy you out? Do they realistically have the financial means of doing so now? How about in the future?
  • Does your successor have the necessary skills and training? What additional education will they need to run your business as well or better than you did? How long will it take them to acquire that training? Are you willing to financially help them obtain these skills?

These questions serve as a good jumping off point for critically analyzing your financial future against your succession dreams to bring those goals into full alignment.

Determine How to Transition Power
One of the biggest challenges facing successors is the daunting task of learning the history and established procedures that make up the bulk of your company’s success. The right business management solution can help catch them up to speed. Software like ASPEN offers relief for dealer-principals looking to smoothly hand over the reins in retirement so that the business will continue to thrive and grow. Data accrued over years of service paints a picture of where your business has been and where it is headed more clearly than any historical anecdote or specialized training could ever provide. Advanced Reporting & Analytics tools make it possible to spot trends and find new avenues for growth. Future decision making can be based on facts, not guesswork, ensuring your legacy continues beyond your reign.