Starting a business is a big dream for many people. However, few have the guts to make the move. Entrepreneurship is not for everybody; it is for the risk takers.
Most entrepreneurs have a lot of passion for what they do and therefore get into business with the right motives.
It is one thing to start a business. It is another to grow it. It is a different ball game altogether to have a legacy.
A challenge many sole proprietors face is how to establish a legacy that outlives their involvement in the business.
A sole proprietorship is a business owned and controlled by one individual. This individual has is the sole decision maker. He also bears the risk of the business alone.
The beauty with sole proprietorship, however, is that he or she also gets to enjoy the profits alone.
Sole proprietorship is ideal in some types of business models. An example is a business which heavily depends on the business owner’s talents and personal skills.
A musician for example, would find it difficult to co-own and share profits with another individual as the business depends largely on his personal talent.
Passion profit businesses are also mostly run as sole proprietorships since passion is a very individual thing. It may be easier to run the business solely than to bring in other people who may dilute your vision.
Values driven businesses are also ideal sole proprietorships especially if the business owner does not easily find partners who share the same values.
While sole proprietorships have independence and autonomy as a strength, one major weakness they have is in succession planning.
If the business owner wants to exit the business, then what happens to the business?
Every business has stakeholders and two of the major stakeholders in a business, including sole proprietorships is employees and customers.
It is prudent and fair for any sole proprietor to carefully consider the impact an exit would have on these two main stakeholders.
This is very important where the business has had a long relationship with the stakeholders.
Before making a decision to exit, think of the impact your decision would have on your loyal staff, some of whom have worked with you for decades. Think of the impact an exit would have on the families.
It is possible to exit and still maintain a business legacy. There are structures and methods a sole proprietor can use to ensure the business runs even if they retired.
There are many reasons why a sole proprietor ought to be motivated to maintain a strong business legacy.
First, it enables you to continue providing a business solution to society.
There are people who benefit from the existence of the business, especially where it offers innovative solutions.
Maintaining a legacy would enable your business to continue despite your absence from the business.
Secondly, many livelihoods depend on your business. Exiting without a succession plan would have a negative impact on many households that directly and indirectly depend on it.
Thirdly it is to continue to provide mentorship and career growth opportunities for upcoming talent.
Exiting without proper succession planning would negatively affect future career growth and mentorship opportunities.
I will give some innovative succession planning strategies that sole proprietors can use to maintain legacy in the next issue.
