Do you know what will happen to your business if you pass away unexpectedly? Do you have a plan for your business after your retirement? If you cannot answer these questions, you probably do not have a succession plan in place.Without a succession plan, it may be difficult for your business to continue beyond your retirement or unexpected death. Without clear direction, family members may fight each other for control of the business. Alternatively, there may not be anyone willing and qualified to step into your shoes. Neither option bodes well for the business.
When should I create a succession plan for my small business?
Succession plans are most effective when they are created and implemented as early as possible. It takes time to find and train an appropriate successor for yourself and for others in important leadership positions.
Although succession planning may seem daunting, you can complete it in manageable steps. The first four steps include:
- Identifying necessary positions
- Gaining the support of leaders
- Determining where successors will come from
- Getting potential successors on board
How do I identify critical positions?
When beginning to create your succession plan, it can be helpful to identify the positions that need to be filled if the business is to succeed. If you have trouble identifying these positions consider how a vacancy of each position could affect the business. Often, the highest-ranking positions are the ones that could most negatively impact the company if they are left unfilled.
Why does leadership need to be involved?
Typically, a transition between leaders works best when the successive leader is trained in by his or her predecessor. However, if you want some of your employees to train in their own successors and otherwise support the transition, they must understand why the transition is valuable.
Where should I look for successors?
If you want to keep your business in the family, you may look to your children or other family members when considering potential successors. However, not all children want to take over the family business.
You may also consider if any existing employees make sense as potential successors for you or other leaders in your business. Sometimes choosing an internal candidate can reduce the cost associated with finding an external candidate. However, if your employees are not strong leadership candidates, you may need to consider eventually hiring someone to fill needed roles. Keep in mind that your timeline and training programs could change based on where your successors come from.
Why should I share my plans with potential successors?
If you would like a family member or current employee to become a successor, it may be valuable to gauge his or her interest before you invest too heavily on that person’s potential involvement. If your candidate is interested, knowledge of your intentions may also prevent him or her from pursuing other job opportunities.
It is not possible to live forever, and you probably do not want to work forever either. Putting a succession plan in place can help your business successfully transition to new leadership and continue to thrive once it is in new hands.