Succession planning is instruction and stipulations for a transfer of ownership to a chosen successor, confirming your business continues to operate under capable leadership on your terms where you choose your successor, set up a financial agreement to fund the transfer of ownership, and prepare them and your business for the eventual transfer.
Succession is an internal transition allowing business owners to maintain a lasting legacy within their organization next season by choosing a successor who aligns with their vision, mission, and values.
Find several tips below on building a great succession plan that satisfies every stakeholder involved.
How to Create a Smooth Succession Planning Process
- Communicate with your organization and successor: despite the advantage of passing on your business with your values and mission intact, succession still initiates a substantial change. Additionally, whether your successor is a family member or one of your key employees/managers, you have to create a financial plan/agreement for the successor to pay for complete ownership of the business.
- Assess and manage your finances: succession planning often requires extensive funding. I use financial projections to advise you on pursuing the most optimal path to funding the transfer of ownership.
- Check your current resources: you may have obtained a life insurance policy that names both business partners as the beneficiaries, which provides the finances to purchase the company’s share if one partner passes away.
- A successor you trust: If you are establishing a family business, choose a family successor willing to train and learn leadership skills. If you prefer an employee or manager as a successor, they should demonstrate excellent leadership abilities and acquire extensive knowledge about running your business.
- List as many successors as possible: recording more than one successor guarantees your stipulations are met during unforeseen circumstances surrounding your primary candidate for succession.
- Be specific about your stipulations: your succession plan should include details of how and when a successor will take over your business to prevent transferring ownership before your successor is ready.
- Create a strategic plan to facilitate the process: use a strategic plan to work on implementing performance plans for the successor, improve operations, cultivate higher productivity, and more to optimize your business for succession.
- Start letting your staff take on leadership: giving employees more opportunities to take on leadership helps the business run without you constantly giving directions – this eases the impact of the transfer of ownership on daily operations to allow your business to run as usual, and you get to schedule more time planning your succession instead of being occupied by overseeing everything.
- Reach out to your customers: ease fears of your current customer base by being transparent about the upcoming succession.
Business owners seeking to create a succession plan can book a consultation with me today. I look forward to helping you establish a meaningful legacy with ease.
