In a recent video, Jeff Faulkner, co-founder of the International Succession Planning Association, spoke about the importance of succession planning for business owners. Faulkner emphasized that succession planning is not just about planning for one's exit or death but about positioning the business to continue indefinitely.
Drawing from the wisdom of Ray Kroc, the man behind the McDonald's franchise system, Faulkner quoted Kroc's famous saying that "when you're green, you're growing. When you're ripe, you rot." Faulkner explained that business owners need to keep growing and not get "ripe" or stagnant. This requires a deep understanding of where valuation starts and how to determine the value of a business.
Faulkner stressed that understanding valuation is fundamental to tapping into what a business owner is truly interested in. This means looking beyond the surface level of revenue and profits and considering the intangible factors that make a business valuable, such as the team, brand, and customer loyalty.
By taking a long-term perspective and focusing on growth rather than just exit strategies, business owners can position themselves for long-term success and create a lasting legacy. Succession planning is not just about the present, but also about the future of the business and the impact it will have for years to come.
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