A succession plan is usually the last thing most travel advisors think about. The unfortunate truth is that so many people follow their passion and dive into being a travel advisor without drawing out a clear path of what they want to do at the end of it all. A succession plan, or an exit strategy, is a great way to plan for the future.
I’m sure we all know a travel advisor or two that has been working this career for well over 20 years, with no real end in sight. They plan to just work with their clients, maybe drop a few along the way, and just keep churning until they’re no longer enjoying the work or no longer want to handle the hardships that come with being a travel advisor.
Creating a succession plan or an exit strategy will help you forecast where you want your business to end up and how you plan on getting there. So, what’s the difference between the two?
Succession planning is identifying, training, and transferring the leadership/management of a company to another person or a team of people. This is where you would spend time finding someone to eventually take over the management of your business. This person could be a mentor, a colleague, or someone you can teach the ropes to and work out a mutually agreeable idea to have them eventually take over day-to-day operations, keeping you in control of ownership rights. Creating this plan means coming up with budgets to hire or bring in a team, possibly looking into royalties on future sales, etc.
An exit strategy is identifying and executing the transfer strategy of a company and its ownership to another person, team, or entity. Essentially with this strategy, you are selling the entire business or removing yourself from management and ownership all together. This strategy includes valuation of the business and determining if you want a full buy-out or if you would rather some sort of lump sum up front with an earnout or royalty of future sales.
To put it simply, succession planning usually still leaves you in charge as owner of the business, but with new leadership. Exit strategies pull you out of the business altogether.
Here are some things to consider when planning for your future:
- Are you looking to sell the business and walk away, or would you rather retain ownership and have someone else run it for you?
- Did you weigh out the pros/cons to each strategy?
- Have you identified any strengths/weaknesses that may come up within the organization over the next 1-5 years?
- When do you need to start your succession/exit strategy?
- How can you be adequately prepared for a succession/exit?
Many of these questions are difficult to find answers to on your own. We highly recommend chatting with a CPA, an attorney, and even a business broker to help decide the best course of action for you and your business!
