Are you ready to step down from the business you created? You’ve put your all into it, and now it’s time to depart.
Stepping down can be a relief or a massive headache. If handled improperly, business succession can be a mess.
It doesn’t have to be, though. Transferring your business can go as smoothly as you want it to. It just takes some proper planning.
To help make the transition as smooth as possible, we’ve created this guide. Keep reading to learn more about seven things you must address in successful succession planning.
1. Your Goals
You can’t create a successful succession plan unless you know where you’re headed. For that, you need to have goals in place.
Consider your personal goals, as well as your goals for the company.
Consider what your company is worth. What is the value of your company, and what do you want to earn? Set a goal, but make sure it’s realistic.
Do you care who ownership ends up with? If you want the company to stay with the family or in your circle of friends, set a goal to make it happy.
2. The Succession Timeline
Successful business succession shouldn’t be rushed. Transferring ownership quickly could result in several problems. Don’t leave the company in a lurch.
Give yourself time to do the job thoroughly and correctly. Each aspect of the company needs to be taken care of. If the succession is rushed, important elements may be missed.
Plan ahead for how the succession will play out. Dividing your plan into phases may make the transition go smoother.
If you do opt for a phased succession, plan each phase carefully. Make sure each phase makes sense on its own and in conjunction with every other phase.
3. Select Your Successor
In some businesses, it’s a no-brainer to pick the right successor. It may be that there is only one family member who took a shine to the family business. Or perhaps it’s someone from outside the family who has worked in the business and demonstrated the skills and personality to best lead the business into the future. But, oftentimes, succession is a much more difficult issue for businesses.
While you may want nothing more than to hand your company over to a family member, leaving it in the hands of the wrong person could be extremely costly. If you have worked hard to find a potential successor without results, you may need to consider other options, including selling the business outright or transferring ownership to an unrelated employee who is ready to take on the role. Doing so may also help you preserve family relationships that could be damaged by a destructive business situation.
Make your own list of essential and nice-to-have attributes, being as detailed as possible. With a clear picture in your mind of the kind of successor you want in place, you’ll have an easier time recognizing a good candidate.
At the same time, stay realistic. You won’t find a clone of yourself, and that’s okay. What you can find is someone who shares some of your attributes, your passion—and, most importantly, your vision of how to lead your business through the transition and into the future.
4. Essential Training
You’ve likely invested a lot of time, money, and effort into your business. Don’t let that die off in the end. Leave the business in good hands by providing all the necessary training.
Make sure all essential operations as covered. Everything you’ve been doing needs to be done by someone, or a new plan needs to be in place.
Whether your job will transfer to one person or several people, make sure someone knows how to keep the company running successfully. You didn’t come this far to see the company fail.
Take note of your top performers. Consider who will move into what positions once you’re gone. Begin training each person for their future responsibilities.
The more prepared the remaining employees are, the smoother the transition will go. Make sure your plan is known to those who will be affected the most.
5. The Trial Run
There are plenty of things that could go wrong as your successor steps up to the plate. But it doesn’t have to be that way. You can help things go smoothly by allowing for a trial run.
Chances are, your successor will appreciate the chance to fill your shoes while you’re still around to guide them. That doesn’t mean you should follow them around or shadow them all day. Instead, take some time away from the office.
Is it time for a much-needed vacation? Whether it is or not, take a vacation anyway. Allow your successor some time to get his or her feet wet.
Upon your return, meet with the employee and find out how everything went. Provide constructive feedback and help. Criticism and belittling won’t do anyone any good.
If you feel the need, provide multiple chances for your successor to take the reins.
6. Your Plan for Each Level
Passing your company on to another is a big business. Many people will be affected, most especially those who’ll change positions. As one person moves up, others will too.
Don’t just train the one who’ll take your place. Have a plan for all the adjustments that need to be made. This can be made by yourself and your successor.
Training your successor is great. But what about everyone else who’ll be taking on new roles? Determine appropriate ways for employees to be trained and prepared for their new roles as the company transitions.
The more training that occurs, the more complete your plan is. Do all you can to have each part of your well-oiled machine working properly when you leave.
As your succession plan gets underway, don’t forget to be flexible. You do want a plan in place, but that doesn’t mean everything has to be set in stone.
Keep an open mind as you create and implement your plan. Involve your board of directors, your successor, and anyone else you feel should be included in your planning.
You may have great ideas, but that doesn’t mean they’re the best in every situation. Accept that someone else might know how to do something better.
A smooth transition is best to keep your company successful. Keep its value in place by doing what’s best for the company as you leave and someone else takes over.
The Secret to Successful Succession Planning
So what’s the secret to successful succession planning? It’s simply good planning.
As you prepare your company for your departure, address every level of the company and every important component. As long as everyone is trained well and your plan is well thought out, you’ll leave the company in good hands.
Will your company need CFO services moving forward? We’d love to help make your company’s transition go even smoother. Contact us today to see how we can help.