Succession Planning For Your Suppliers, Contractors And Manufacturers’ Reps

The specific conversation can involve asking partners how long until they retire? What plans do they have for succession? Will they sell to one of their current employees, to another company, or just close up shop? Cohon reports that succession planning is a common topic at meetings of manufacturers’ reps. It is likely, though, that some are putting off their thinking about succession planning, just as so many of us put off estate planning.

Opportunities may exist with some of the business partners. A company can take a fresh look at the contracting-out decision. For example, the choice between a company sales office and an independent agent is best made in a calm mood, not in the panic that comes from missing Wall Street earnings forecasts. Similarly, with other outsourced relationships, such as IT services, decisions should be made with a long-term view of business strategy.

A business that provides services to others may also find an opportunity in competitors’ retirements. Companies without a good succession plan might be purchased at attractive prices, often with seller financing, enabling younger business owners to expand their operations. One person’s problem can be another’s opportunity.

The wave of small business owner retirements will be a significant challenge for years to come. Planning for the transition of critical business partners is as important as planning for a company’s own employees.

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