A Succession Plan is often rendered a one-off thing left rotting in a drawer; this mindset will inhibit its effectiveness. It’s crucial to consider Succession Planning as an important aspect of your overall business strategy that requires regular reflection and ongoing development.
A robust and effective Succession Plan takes a minimum of three to five years from initial planning to implementation. Having said that, a shorter term plan is better than no plan. Generally, the longer you have to execute your plan the bigger the opportunity you have to maximise the value of your business and therefore capital you extract on exiting.
If you were hit by a bus tomorrow, how seamless and pain free would the transition be – both for your business and those who rely on it? In such an event would the operation, management and value of your business be compromised?
Succession Planning isn’t just about imminent retirement. It’s still an extremely valuable exercise whether you’re planning to retire in 20 years, or if you’ve already lined up your successor. Should something unforeseen happen to you, this planning will downgrade a major crisis to a significant but manageable event.
By having the conversations now and documenting clear intentions you could save yourself (and your stakeholders and family) a lot of pain should an unexpected event occur.
Planning for unexpected scenarios forces you to assess who does what, why and how they do it:
It’s about providing a safety net for your team. Documenting the key business processes in your company enables you to devise the most efficient system for each task. Having a documented process to follow is helpful when a team member is absent but most importantly when it comes time to transfer this knowledge to a new manager or owner.
Without dedicating time to the succession process you’ll miss valuable opportunities to reduce stress and improve value. Devising your succession process will ensure you consider all potential opportunities and make the right decisions for your business, your customers, your team and your future.
The business that you have grown could be your nest egg. With so many businesses likely to hit the market in the coming years, it’s more important than ever to groom your business wisely. Great businesses will continue to achieve a high sale value; others will face greater pressure or potentially be rendered unsalable.
With passion and energy comes conflict. When directed effectively this can lead to better communication and decision making as well as new opportunities for the next generation to improve the business.
A big part of Success Planning is knowing when and how to let go. As business owner you must be financially secure or it will be hard to retire. You could also need a new focus (or focuses) – providing a reason to retire. Mentoring and coaching can be a great way to impart valuable knowledge gained during your career.
Succession Planning is not only about preparing the next generation but also ensuring the business can weather the unexpected without negative consequences. The succession of a business is also a fantastic opportunity for the next generation to enhance the business and add value.
“Businesses are not made to last but businesses are made to be needed.”Denise Kenyon-Rouvinez
If you would like to find out more about Creating your initial Succession Plan please do get in touch and we can send you a free more detailed 27 step guide.