30 to 40% of MFDs are in the age group of 50 years and above. While there is no specific age for MFDs to retire, ‘Is there a succession plan in place?’ is a question to ask. The unprecedented pandemic makes this question even more pertinent.
Further, a lack of succession planning leaves investors in a lurch during untoward events.
With this in the background, Cafemutual Ideas Fest 2022 (CIF 22) hosted A.K. Narayan, Mentor, Author & Investor, who shared with us practical tips on succession planning.
“Business continuity is very important. Are we talking to our family/next generation and asking them to join our training process? Training is a long drawn process. We have been trained so well that we can handle our investors. But, is our next generation ready to do that? Can we force them? Moreover, will our investors be ready for such a transition? We don’t know.”, said A.K. Narayan.
He further added, “Let’s not assume that our next generation will take over our business in our absence.”
So what is to be done ?
Succession planning is a must, and anybody above 50 years of age should plan their succession immediately.
Broadly speaking, there are three types of business models - proprietorship concern, partnership firm and company. Succession planning is comparatively simple in the case of the latter two i.e. by way of inducting a new partner or selling shares to another individual who would be joining the business. In the case of a proprietorship concern, it becomes a little complicated. While MFDs are good at managing their business single-handedly, they should look beyond their current setup and collaborate with other like-minded MFDs.
Here is a quick bite on succession planning.
