Succession planning is an important part of the long-term strategy of your small business. Creating an effective succession plan ensures your company passes to the next generation smoothly, efficiently, and according to your wishes.
Remember as well, the decisions you make regarding your business and assets stretch far beyond money alone. In particular, succession planning has an impact on the values you wish to pass onto the next generation who will be running your company.
A good starting point is getting an understanding of what you want your company to achieve both during your life and beyond. Proper succession planning helps ensure this happens.
Succession issues can easily be avoided by drafting up a succession plan as early as possible.
Often, succession planning involves family-run businesses although this is not always the case. In family-run businesses, however, succession can be a more complicated issue, especially if there are ongoing internal family feuds or disputes. By starting succession planning early, you can work on resolving these issues over time.
If you leave succession planning to the last moment, however, disputes and disagreements can intensify.
In addition, the sooner your team has a clear understanding of what will happen after you step away from the business, the better.
Decide Who the Successor Should Be
If there is a natural successor (for example, a co-director or, in the case of a family-run business, a child who already has a leadership role), deciding on a successor is obvious.
However, the process is more complicated if the natural successor has not played an active part in the business, or if there is no natural successor at all. There can also be complications if others believe they should be the natural successor and/or disagree with your choice.
Critically evaluating family members and/or business colleagues is never easy, nor is prioritising a colleague over a family member. However, you must always keep the best interests of your business in mind.
After all, appointing the right person as a successor is not always the same as appointing the person who is most expected to take over – or most expects to take over. By prioritising your business over your personal relationships, you will put the company in the best position to succeed when you’re no longer involved.
Have Discussions with Potential Successors
Unbeknown to you, members of your family may not want to take over your business. Only by sitting down with potential successors and having a frank discussion with them can you find out exactly how they feel. This process can also make choosing a successor easier.
Start Right Now
If you run your own business and have not yet looked into succession, don’t delay any longer.
You never know what is waiting around the corner plus proper succession planning takes time. Therefore, succession planning can never begin too soon, so you should get it squared away immediately.
For more help and advice with your business, please contact a member of the Gilroy Gannon team today.