Create a succession plan in 6 steps
Every small business should consider a succession plan to ensure the sustainability of the business. Succession planning means preparing to replace one business leader with a new one. In an ideal world, your plan is created well before you retire, because it is critical for a small business’s continued prosperity.
Here are six tips to get you started.
- Create a business model that can survive in your absence.
Succession planning is all about creating a business model that works, particularly after you’ve left the company. If you can’t envision your business maintaining continuity in your absence, you’ve got some gaps to fill. Identify those areas then correct them. Sometimes leaders get to plan their exit for years, and sometimes emergencies thrust those circumstances upon them without a moment’s notice.
- Minimize your business’ risks.
Once you’ve realized that illness, injury and death are real possibilities, it should be easy to see that risk must be minimized. That means protecting your business and staff by drawing up the necessary legal documentation, including stakeholder agreements, business plans and insurance policies.
- Build great management and leadership within your business.
Another way to minimize risk is to train your people to be strong managers and leaders of your small business. Hire the best staff possible, then document strategies and processes. Your business finances, marketing plan and business plan should not be a puzzle for others to try to solve after you leave.
- Work with others to develop an exit strategy.
Don’t tackle succession planning alone. Work with legal and financial professionals to ensure your plan is comprehensive. Work with your business partners (if you have them) and managers to establish a hiring committee when you step down from your leadership role, and ask that team to nominate and name an interim leader to take over your responsibilities for the short-term in an emergency.
- Establish contingency plans.
A good succession plan takes into account that things don’t always go as planned. Develop contingencies so your business isn’t forced to operate without a leader. For example, what happens if you must retire in eight years instead of 15? What happens if the leader chosen to take over is no longer with the company? It may be necessary to update your plan along the way to account for personnel and operational changes.
- Train someone at your business to do your job.
Whether you train one person or divvy up your leadership responsibilities among several different employees, train someone in the business to fill in for you. This gives your business additional security. Not only will you have someone competent to assume leadership during a major transition, you might even feel comfortable enough to take a vacation in the next year.
Failing to create a succession plan for your business can leave behind a devastating mess. Can your employees say with certainty what would happen, who’s in charge and how the business should proceed if you are suddenly unable to work? If the answer is no, now is the time to create your succession plan.
– Contributed by Alyssa Gregory through a partnership with U.S. Bank.