Top 5 Things You Must Know About Succession Planning

Did you know that 58% of small business owners don’t have any succession planning in place, according to a study by Wilmington Trust? 78% of these small business owners blamed lack of time for it, as they were too busy managing their business to start thinking about how to succession plan.

But there are many benefits to succession planning that you as a family business owner might be missing out on. If you would like to learn more about what is succession planning and some tips for it, then keep reading.

1. Succession Planning Is Absolutely a Must

What is succession planning? Most family business owners are not going to be around forever to run their businesses. That is a given.

That’s where family business succession planning comes in. With a successor in place who is trusted, and who is aware of and on top of all your business needs, you can let go of the reins without worrying about your small business failing a few months after you leave.

Of course, you can’t control all aspects of your business once you are no longer in charge. But you can assure that your business is in good hands by choosing a successor who has experience and knowledge and one that can guide your business to even greater heights.

Interestingly enough, it’s not always logical and apparent who should be your successor. It doesn’t necessarily have to be a family member or one of your children. It could be someone else in the company who has shown great promise and whom you think is going to be a better fit as a leader of your company than a relative.

That could create a crick in your relationship with your children or relatives. But it’s well worth it if you can ensure that your family business and your employees stay on course for a long time in the future to come.

2. You Need to Have a Plan in Place for Future Transition

Even though you might be busy beyond comprehension running your family business, you need to make time for succession planning. It’s not something to push aside until you are about to retire.

If you scramble at the end to find someone, you might end up choosing someone who isn’t entirely suitable, but is ‘good enough’. That’s not the way to ensure the future success of your small business.

Start building a plan for future succession now. Before your impending retirement comes around. It will be well worth the time you spend on it.

3. Think About Potential Succession Candidates

Even if you haven’t thought about it directly, there are probably a few candidates that come to your mind when you think future successor. Have a conversation with these potential successors and gain insight into what they think about being future successors.

Also, once you have an idea of the top 3 candidates, speak with them about the next stages of succession planning and how they can ensure they end up on top. Make sure to inform them that there are no guarantees since you are still working with several successor candidates.

If you feel like you have no one in the company that you could trust as a future successor, then start building this into your hiring strategy, hiring only those executives who you think would work out as successors.

4. Start Professional Development Efforts in Concert with HR

Bring human resources into your succession planning efforts, so that you can start some professional development and prep work for your candidates. HR can also start building a plan for performance management and compensation for your future successor.

Start with job rotation so they can gain additional knowledge and experience. Also, connect them with mentors so they boost their soft skills, like communication skills like presentation and negotiation, and interpersonal skills, like diplomacy, time management, and empathy.

All senior executives should have buy-in into all the successor candidates so that succession planning can be driven from the top. Don’t do it in secrecy, because that could result in a huge blowout when you reveal your future successor.

5. Always Do a Trial Run of the Successor While You Are Still Around

It’s always a good idea to let your chosen successor start leading the business while you are still around to guide them. They are going to be wet behind the ears – that’s a given. But if you are around to give them advice or feedback, they are going to move in the right direction and build your business up to what you desire it to be.

Of course, you don’t want to interfere too much with their decisions. Micro-managing isn’t the way to go here. But you should be around to help them feel more comfortable with the whole process, at least in the beginning.

Once it feels like they are solidly in place, you can ease out of operations and management and go enjoy your retirement in peace.

You Didn’t Start a Business to Be In It Forever

No matter how much you love to work, you didn’t start your family business so you could work in it until you die. It should be a means to an end, whatever that means to you.

That’s why succession planning is so crucial. With a proper plan in place, you can disengage from your business, and rest assured that your small business won’t ground to a halt within a few weeks or months.

Your employees rely upon you to ensure their daily livelihood. With a proper successor in place, you can ease their worries and keep them employed for a long time to come.

Did you enjoy this article on succession planning tips? If so, please keep browsing our website for articles on related topics.