If you operate a small business, succession planning is a must. It gives you the ability to identify who will take over certain responsibilities in the event of an unexpected tragedy or how things will operate if the owner decides to retire.
Succession planning reflects a long-term strategy designed to carry the small business forward for months, if not years, ensuring the company is successful during the interim, regardless of the length of the period.
If you haven’t created a succession plan for your small business, here are some tips to help you get started.
Determine Which Plans You Need
Your succession strategy may vary depending on a few factors. For example, you may wish for things to be handled one way in the event of the owner’s death and another if they retire early.
Consider the potential scenarios that could lead to the owner’s exit and determine which justify different approaches based on the company’s goals. This will help in the development of a robust succession plan that addresses the various possibilities, ensuring that the right steps are taken based on the circumstances involved.
Consult with the Proper Professionals
Once the various required plans are in order, you need to speak with a variety of professionals, including accountants and lawyers. Ultimately, if a succession plan is enacted, certain assets will need to be transferred into the care of another, and that means specific steps need to be taken in advance to ensure a smooth transition.
Precisely what will need to be done varies depending on your goals, hence why it is wise to consult with legal and financial professionals. Take the time to discuss your goals and identify potential obstacles. Then, address them quickly to make sure everything is in order.
Consider Potential Candidates
A succession strategy requires you to identify individuals to assume various roles should the plan be enacted. In some cases, this will be fairly straightforward, particularly if you only have a few employees or family members from which to choose.
However, if there are several solid candidates available, then you need to determine who can successfully take over if the need arises. Who you select may vary depending on the precise circumstances. For example, a retirement may allow a person to be trained into the role while, in the event of death, someone needs to take the reins immediately.
Speak with Your Top Choices
Before you add someone to your succession plan, you need to have a conversation with them. While you may assume that the individual is more than willing to step into that role, that isn’t always the case.
Each candidate needs to have input before they are officially listed as a successor. That way, should there be any concerns, these can be discussed. And, if they decide they don’t want to participate, you can select someone else.
Ultimately, having a succession plan is a necessity for small businesses. Otherwise, should the unexpected happen, the company may not survive.
By following the tips above, you can begin creating a plan that will ensure the business lives on no matter what the future holds.