Planning for the future by having a succession plan in place for a small business is an important step to take. By creating a business succession plan, business owners can effectively plan for the future and develop a sound strategy to meet their unique needs and circumstances.
Selecting a successor
Business succession planning starts with the selection of a successor. Depending on the structure of your company, the first place to look for a suitable successor may be among employees of the company. Employees should be reviewed as possible successors to determine if they have the right leadership skills, experience and qualities needed. In some circumstances, family members who own the business may want to have a consultant evaluate potential succession candidates. This process should begin well before any planned retirement.
Preparing the successor
The next thing to do is to develop a formal training plan so the successor that has been chosen will work in each of the critical function areas of the company. The successor chosen needs to not only understand the executive duties they will be taking over but all aspects of the organization as well. A timetable should also be developed for when control of the business will be officially turned over to the chosen successor.
Lastly, the business owner should prepare for their retirement and then hand the business over and step aside.
A business succession plan also sometimes needs to be revisited. If circumstances change, the plan should be updated as soon as possible. Careful and thoughtful succession planning can help with a difficult transition and also help ensure it goes as smoothly as possible.