Succession Planning & Exit Planning are NOT synonyms

This week I had a conversation with a marketing / SEO expert who told me he had "lots of experience with other pros like you." At first I thought, that's amazing! Because there aren't many people/companies who do what we do. So to work with a person wh "gets it" would be awesome.

But almost immediately I realized... he doesn't get it. He went on to speak about business valuation and aiming our advertising at company owners who want to increase their valuation in order to sell their business.

He - like many others - - has confused succession planning with exit planning.

This is not unusual; last year Law.com asked me to write an article for their audience (lawyers!) explaining the difference between the two. So don't be embarrassed if you thought the words were synonyms - because your attorney probably doesn't know either.

But now - let's clear up the confusion...

If you own a business or lead a team, you’ve probably heard the terms succession planning and exit planning tossed around. They both sound like ways to prepare for the future, but they’re actually pretty different. Here's our definition: succession planning is about making sure your business keeps running smoothly with a strong pipeline of future leaders in place, while exit planning is about figuring out how to step away from your business in the smartest way possible (legally, financially, timing-wise, etc.)

Here's more:

Succession Planning?

Succession planning is all about building a strong bench of future leaders within your company. The idea is to develop and prepare people so that when the time comes, they’re ready to take on bigger roles.

This usually involves:

• Spotting employees who have the skills (or can develop them) to step into leadership roles.
• Providing training, experiences, job rotations, mentorship, and other growth opportunities so they’re ready when the time comes.
• Creating a system for performance reviews and promotions so leadership changes don’t feel like a scramble (or a dagger to the heart).

The benefit? You don’t end up in a crisis when a key leader leaves. Plus, investing in your employees this way helps with retention—people are engaged and productive when they know they know they are working towards a future with you.

Exit Planning

Exit planning, on the other hand, is about preparing for the day you step away from your business—whether that’s selling it, passing it down, or even closing it. This process helps you maximize your business’s value and ensure everything transitions smoothly.

A solid exit plan includes:

• Choosing your exit strategy—selling, passing it on to family, merging with another company, or something else.
• Sorting out the financials—things like business valuation, tax planning, and structuring a deal that makes sense.
• Handling the legal side of things—contracts, agreements, and making sure everything is buttoned up for a clean transition.

Without an exit plan, you could end up scrambling at the last minute, leaving money on the table, or dealing with a messy transition. And no one wants that.

How Are They Different?

Even though they’re both about planning for the future, they focus on totally different things.

Do You Need Both?

Yep! If you’re a business owner, it’s smart to think about both. Even if you’re not planning to exit anytime soon, having a strong leadership pipeline keeps your company stable. And when the day does come to step away, you’ll want a solid plan to make sure everything goes smoothly—for you and the business.

At the end of the day, succession planning keeps your business thriving, while exit planning helps you leave on the best terms possible. They can be done in tandem or individually. Having both in place is just good business. :-)

The Training Doctor, LLC helps small to mid-sized companies to develop succession plans filled with ready and capable future leaders.

Nanette Miner, Ed.D. is the Managing Consultant of The Training Doctor. She is a frequent speaker at industry and trade association conferences and regularly speaks to Vistage Worldwide groups on the importance of succession planning. Nanette gives back to her community and small businesses as a SCORE mentor and spokesperson.

• Learn more about The Training Doctor's services, here
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