Succession Planning for Entrepreneurs

17 Sep 2018

Besides running a business successfully, a common point of concern for most entrepreneurs is how they should go about their succession planning. Selecting the right successor isn’t solely about who is intelligent enough to take over, but many other qualities which have been discussed in detail here.

A successful succession plan ensures that there is minimum disruption in business operations and that the right people with the right skills have been placed in their rightful positions to take the business forward.

Identify the Needs

When talking about succession planning, most of us believe that it is limited to identifying the person who can fill in the most important position after you step down. But this approach may not always be helpful as in businesses that haven’t yet grown to their full potential may have changing leadership needs.

You should take cues for succession planning for your successor from your business strategy. For instance, if you plan to expand your business overseas or to grow your business by means of acquisition, these factors will play an important role in identifying and developing a suitable successor.

Management succession presents you with an opportunity to take your overall management structure into consideration and review the things that you may need to change about it. It also gives you the chance to overhaul your office culture and select a successor who can change it to better suit the changing times.

If your business has always had a dominant owner-manager culture you can put in place a completely different structure that involves greater delegation and doesn’t rely on few selected individuals to get work done.

It is quite likely that you may still have some emotional or financial chords attached to your business even after you have quit it. If this is the case then you should select a successor who can retain the values and business ethics that have been followed since the inception of the business.

Management Development and Succession Planning

Generally, succession planning must commence years before the successor has to be nominated. This gives the business owner sufficient time to select a successor who can be a perfect match in terms of skill and experience.

It also gives you enough time to develop or train a person who you believe can take over your responsibility but isn’t quite ready yet to take on the responsibility. By giving them exposure to different responsibilities you can evaluate how they may perform when they finally take over the business.

For example, you can make that person a non-executive director at another company or make them work in another organisation altogether, if you believe that would help them gain the required skill set.

Another important aspect of succession involves understanding how relationships with key staff, suppliers, customers and other contacts will be affected by a change of leadership. The person whom you appoint as your successor should be able to maintain the relationships exactly the same as before and if possible enhance them further.

The Broader Issues

Most succession plans talk endlessly about finding the successor from within the organisation. But this approach may not always be the best for your business. It may be worthwhile to look beyond the perimeters of your office to see if any outsider may be more suited for the post.

While selecting a successor from within the organisation certainly helps a business to retain their culture, it also motivates those employees who see succession as an opportunity to grow.

Selecting several candidates for succession can lead to unhealthy rivalries and intense competition which can mean disappointment for those who turn out to be unsuccessful at succeeding the predecessor.

Retaining Power

While it is good to show a potential candidate the ropes with which they can climb to your position, it may also be wise on your part to retain an advisory role on the board for the larger good of the organisation. Your continued consultation could make a lot of difference to the overall performance of the company.

Whilst you retain an advisory role in the organisation you should also think about who will ultimately become the owner of your assets if anything unforeseen was to happen to you. You can provide clear details about it by writing a Will, which you can write with the assistance of a solicitor or by using a free Will template.

Selecting the right successor can mean the difference between the success and failure of your business. It is therefore important that you make this decision taking every important aspect into mind.

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