It is a pleasure and privilege to grow old.
However, many people worry about this. For example, they may be concerned about what they are leaving behind for their loved ones or potential battles with ill health as they age. As a business owner, however, you may wonder what will happen to the company you’ve worked so hard on when you are no longer around. While this may not be the nicest topic to discuss, you’ll have much greater peace of mind once you’ve developed a business succession plan.
What is a business succession plan?
A succession plan for a business owner is a list of instructions or plans to be followed in the event of the owner’s retirement, incapacity, or death. It ensures the business can function at a high level, even in their absence, by making the leadership transition as smooth and stress-free as possible.
An alternative to creating a succession plan is selling your business. However, many business owners would prefer to avoid this. A succession plan gives you more choices over who takes over your business. But where do you start when creating a succession plan? Here are a few things you should consider.
Predict the challenges that lie ahead
When it comes to effective succession planning, it is critical to predict the challenges that will arise when the plan is enacted. Leadership can implement the relevant instructions to minimize chaos and confusion.
For example, as a business owner, you may be used to taking the lead on specific tasks, leaving a skill gap within your team. By identifying what challenges may occur, you can provide employees with training and guidance so they can step up to the plate when necessary. The sooner you do this, the better. After all, not only does this mean they’ll feel a little more prepared for what lies ahead, but they’ll also be able to work more productively moving forward.
Choose your successor
Choosing your successor (i.e., the person you want to lead in your absence) is also critical. There are many reasons for this. First, it is important to communicate your wishes with a potential successor to determine whether or not they want this. For example, if you were considering passing your business on to a family member, this may not necessarily be the future they envision for themselves, which could leave your business in shaky hands.
Having this discussion outright means you can manage your expectations and find a suitable replacement when necessary. It also means that you can discuss your wishes and goals, which increases your confidence in their ability to take the reigns. Furthermore, you can provide them with the necessary support and training to prepare for the transition into a more senior role. Encourage them to shadow your role in the company so they better understand what you do daily.
Alter your deeds
If you own real estate as part of your business (such as an office or warehouse space), you may also want to alter your deeds ahead of time. This will allow for a smoother ownership transition when the time comes, minimizing any financial issues or business interruptions.
Alternatively, you should consult a lawyer to help you with your next steps. This is important as it means that you can ensure that your plans are above board and that your successor(s) will not encounter any legal challenges that could otherwise lead to business ruin.
Have a discussion with key personnel
Before appointing your successor, you should host meetings with key business personnel, such as board members. After all, they, too, have a vested interest in the company and its growth. This means they will likely have an opinion on the most appropriate successor. They may want you to consider an employee you’ve not worked with directly.
Having a discussion will also allow them to voice any concerns about a candidate’s suitability for the role. If, during this discussion, you realize you’ve yet to find a suitable successor, you can begin searching for that individual.
Start sooner rather than later
Whether you want to retire within 5 or 15 years, the sooner you start your succession planning, the better. And this isn’t just so you have extra time to plan your first post-retirement vacation. Starting sooner rather than late gives you ample time to:
- Put together a timeline that makes the transition as smooth as possible. You may want to gradually reduce your working hours and have your successor fill in during your absence. This means that when the time comes, they are already confident in their ability to step up. It also means they can ask you any questions they may have while you are still engaged in business operations.
- Deal with all the legal paperwork. Legal paperwork and documents can take a considerable amount of time to complete, authorize, and make sense of. After all, unless you have a background in the legal field, you may find it near-impossible to make sense of the legal jargon. Starting now gives you time to seek help and understand what you are dealing with.
Finalize the documents
Once you’ve dealt with the tasks above, it’s time to turn your plans into a document that will be used and referred to moving forward. You can find plenty of templates online that will help you to ensure the documents are formatted correctly and that no important information is omitted.
Ideally, this document should be drafted by a legal professional or edited by them. This way, you can ensure that everything is up-to-date and accurate. You should create multiple copies of this document and store them in a secure space. Let your successors and other key personnel know where to find and access the document for when the time comes.
Final thoughts
A good business owner is always looking toward the future. After all, even when you’re not considering retirement and succession planning, a future-oriented mindset allows you to set goals that facilitate business growth and expansion.
While you may find it hard to envision your business without you playing a critical role, there’s some comfort in thinking that you can build a lasting legacy for your hard work through business succession planning. This could mean your business is still around in 20, 30 or even 50 years. Not only is this something to be proud of, but it could mean that it continues to be a source of financial support and stability for your loved ones, such as your children, grandchildren, and maybe even great-grandchildren.
As such, there’s never been a better time to start creating your business succession plan. Remember, the sooner you get started, the better. You’ll gain peace of mind and know you will someday transition smoothly into retirement. Here’s to YOUR success!
Carolyn R. Owens has over 25 years of proven experience and serves as a Career Strategist, Leadership, and Mentor Coach. She is the Chairwoman and CEO of Infinity Coaching, Inc., where they help you up-level your skills so you can up-level your income. Infinity Coaching, Inc. provides one-on-one and group coaching, organizational training, and personality assessments. Carolyn is certified to give the Energy Leadership Index, Myers Briggs Type Indicator (MBTI), DISC, Emotional Intelligence, and Leadership Circle Profile assessments. You can learn more about assessments and other products and services at https://infinitycoaching.net.
