It was announced this week by Apple that Steve Jobs had resigned as CEO. Mr. Jobs is the creative genius behind the technology company. The announcement seemed to catch many off guard. The media is speculating about what will happen to Apple’s stock and the company’s future. Fortunately, the company had a plan in place.
In its announcement, Apple stated that “Jobs submitted his resignation to the Board today and strongly recommended that the Board implement its succession plan and name Tim Cook as CEO.” That is exactly what the Board did and Mr. Cook is now the CEO of Apple. What is important to note is that Apple had a succession plan in place in the event that Mr. Jobs died, resigned or could no longer serve as CEO. Unfortunately, many companies do not have a succession plan in place. Not having such a plan in place can lead to disastrous results, including the failure of a business.
The majority of businesses across the United Statesare family or closely-held businesses. Often such companies do not survive over time. Why? Inadequate estate planning and failure to properly plan for the transition to the next generation are the main reasons.
Succession is a complicated and very emotional topic for business owners. Business owners tend to procrastinate when it comes to succession planning. Owners have to deal with their own mortality and control. Succession planning involves making tough decisions. For example, who will lead the business into the future? Some of the other key areas to address are preparing the financial arrangements and ensuring the equitable treatment of non-working family members (family members who do not work in the business).
Developing a transition or succession plan takes time. Apple did not complete its plan overnight. It is a fact that if a business does not develop a succession plan, its chances of surviving into the next generation are diminished. The lesson to learn from the Apple announcement is to start your planning now – don’t wait any longer. Oh, by the way, Mr. Jobs has been elected Chairman of the Board. I guess he did not want to give up total control – remember that was part of the plan. Does your business have one?
For more information, please contact the office of Fraser Trebilcock at 517-482-5800.