With many successful businesses growing, succession planning can be overlooked. According to a survey by the insurer Nationwide, 60% of business owners said they did not think a succession plan was necessary. In questioning 502 owners, it was found that those who are in their 20s and 30s were more likely to have a succession plan than those who were in their 40s+.
Succession planning should be the priority for small business owners since the company’s survival depends upon it. An example of a succession plan is, selecting someone to take over a business when the owner retires. This could be in preparation for the company to be sold. The process can be broken down into three steps:
Step 1: What are your reasons and who can help with the succession plan?
Determine what is stimulating you to develop your succession plan, the influential factors you are concerned with or aware of, such as:• Unexpected departures due to illness
• Planned departures in the next few years of key people
• New strategic directions or market trends that will require new skill sets for key positions
Step 2: Link your succession to your organization’s overall strategic plan & identify successors.
The strategic plan of your business informs all stakeholders, customers and employees, the direction of travel for your firm. If your succession plan is not matched to your overall strategic plan, then it is likely to fail. Strategic and successions plans need to align along the way, such that you have identified key positions your plan must cover.
Develop candidates internally as well as establishing recruitment pools to find potential successors. In doing so, clearly outlining to the individuals the competencies, talents, skills, and knowledge required for each key position.
Step 3: Execute the plan.
The succession plan needs to be executable and, translated into an action plan. It must include measurable goals, specified timelines, and people accountable for taking various actions or applying required processes.
The execution of the plan needs to be continuously monitored, evaluated and adjusted accordingly to ensure its success.
It is key to have a succession plan with a structure and people identified. Having no clear succession plan in place might lead to suppliers and customers becoming nervous on the longevity of the firm.
To find out more please visitNew Business Succession