Every business needs a succession plan, but when you have a-million-and-one daily tasks on your plate, it’s easy to let preparing yours fall to the bottom of a long list. While that’s understandable, it’s also a risky business move.
You want your business to be in good hands, but if something happens to you, or you decide to leave the business without a succession plan in place, its value could disappear overnight. You might also struggle to sell it for what it’s worth or pass it on to your family. Luckily you don’t need much to start creating a succession plan – a pen, paper and 20 minutes should do it.
Let’s get started…
Understand the purpose of your business
The first step is simple: answer two questions – why you’re in business and what you want to achieve. Make sure you properly document your answers so you have them on hand for when you start planning.
Dominic Moran – Advisor at Advantage Business who has helped dozens of business owners create succession plans – explains how you can get your head around this important step:
“Why am I in business? Is the most essential question to ask yourself first. Then consider: Do I want to sell? Should I pass it on to someone? Should I train up someone internally to take over? Or should I stay involved but take a step back?”
Once you’ve answered these questions, figuring out how you want to exit the business is much easier.
Align your goals
The goals of your business and the goals stated in your succession plan must align. If they don’t, there’s a chance your business won’t succeed beyond your leaving. In saying that, make sure you’re setting realistic goals that don’t compromise those of the business. According to Dominic, this step is especially important due to today’s uncertain business environment.
“We operate in a VUCA environment – Volatile, Uncertain, Complex and Ambiguous. Given the multiple layers of complexity, how should you navigate this business environment and exit well? Through clear goal-setting – it’s a principle of success, not a nice to have.” said Dominic.
Your goals need to be broken down into the detail and recorded to help drive every part of your business as one. Dominic says this is the only way to be sure you’re headed in the right direction:
“It’s important to set appropriate goals across every part of the business. Goals for people, systems, processes, governance, customers, sales and marketing – break it down. If you do this, it will bring clarity and certainty in an uncertain world.”
Share your vision
Businesses rarely prioritise their vision. Often they’ll quickly whip out a mission statement then get on with the day to day business. But it should be the starting point for both your business’s everyday operations and succession planning – it’s what connects all the dots.
“If you don’t know what your vision is then you’re going to be wandering around wondering why the business is not achieving its potential. The vision needs to be clear and well-articulated to keep everyone on the team focussed and getting out of bed in the morning.” said Dominic.
For small businesses, it’s usually the owner’s responsibility to create this vision. If the business is going to be successful, the owner has to drive the vision, share it with their staff, and even go so far as to include their feedback.
Communicate early on
The responsibility for succession planning shouldn’t sit with the business owner alone. Dominic says the plan needs input from the entire organisation:
“There may be many stakeholders within a business who need to be on board, for example, the partner of the owner in a family business, parents, children, siblings and other shareholders. One person can drive the process but it can’t occur in isolation.”
To make sure the whole business is on board, you need to communicate your plan to them clearly and as far in advance as possible. This is particularly important when naming your successor.
“Do they want that role? They may not. An open two-way dialogue is absolutely crucial. It must be carefully managed and taken step-by-step,” said Dominic.
This should include clear expectations and timelines so that the process of succession is carefully managed for all parties.
Start planning…
Now, armed with your pen, paper and this blog you’re ready to put some thoughts on paper and begin creating your succession plan. If you need a hand putting your succession plan onto paper don’t be afraid to take advantage of our experience.
Have a no-obligation chat to one of our friendly, local advisors today about how succession planning can work for you.
