Succession planning is a process of identifying people who will succeed current leaders and is crucial to any business looking to remain competitive in its industry, especially in challenging times. It’s vital to consider your plan of action sooner than later—not just because it can help your company avoid the pitfalls of leadership transition, but because most businesses don’t do this work until it is too late.
This article will lay out the flow of getting started and following through with business succession planning:
1. Be proactive with a plan
2. Identify succession candidates and communicate the process and stages
3. Step up professional development efforts
4. Integrate your succession plan into your hiring strategy
5. Implement the pace of succession over a comfortable time frame
1. Be proactive with a plan
Similar to the importance of having insurance in place, having a business succession plan is critical. When your time comes to pass the baton, you want to ensure it doesn’t get dropped. A well-thought-out succession plan will enable a smooth transition from one generation of owners or managers to the next.
2. Identify succession candidates and communicate the process and stages
To help your business succeed, you must identify candidates who will be involved in the process. This will create a sense of urgency in the mind of your successor, which is vital for achievement.
Your team and board members should also be aware of the succession process so they can start working with your successor. Communicate this information to shareholders so they know what’s happening behind the scenes.
3. Step up professional development efforts
In addition to developing your succession candidates and providing growth opportunities, you can also:
- Provide training and development
- Give them a chance to attend conferences, seminars, and workshops to sharpen their skills in different areas
- Help them find mentors within your company who will guide them through their career journey and provide feedback on their performance from time to time
- Give coaching support as needed regarding leadership styles, interpersonal relations, or any other concerns they may have
4. Integrate your succession plan into your hiring strategy
As part of your business succession planning efforts, you need to have a plan for recruiting new leaders and employees. This means setting up an ongoing recruiting process where you’re constantly evaluating and interviewing candidates who might be a potential fit for future roles.
When it comes to finding the right people for your business, don’t just focus on what they say—focus on how they say it:
- Are their answers thoughtful?
- Do they show respect for the role?
- Do they know enough about what’s going on in the company and industry?
For example, if you’re considering external professionals with impressive leadership experience, look at their career paths carefully. If someone within your company says, “I want more responsibility, but I’m not ready yet,” take note. Internal employees who have worked with and for you long-term can often be great options but may not be CEO material.
5. Implement the pace of succession over a comfortable time frame
- Avoid undue pressure: The process of succession planning needs to be done in a way that is comfortable for you and your employees. If you rush the process, it could lead to mistakes and derailment.
- Take time: Succession planning requires patience and careful consideration of every step. You want to ensure everyone involved has ample opportunity and space to think through their roles in an eventual transition.
Avoiding undue pressure or rushing things is critical if you want fulfillment with succession planning. Taking time will allow everyone enough room to craft solutions while giving each other enough space to avoid being overwhelmed.
Financial agenda next steps
Develop a thoughtful buy/sell agreement with a professional.
While you should consult your attorney to draft the specific language and provisions for your buy/sell agreement. At Brown | Miller, we can help you prepare by discussing the following elements and considerations of a thoughtful buy/sell agreement.
It details:
How much money you want to receive and where it will come from- How much time you’ll have to find a buyer before retirement
- How many shares of stock in your company will be given up in exchange for this payment (and what happens if those shares don’t sell)
- What happens to existing employees’ jobs after you retire
Hire a business succession planning expert
Succession planning is like putting together a puzzle; you must collect all the pieces to ensure success. This completed puzzle will help you avoid common pitfalls plaguing businesses looking for long-term growth.
If your business does not have a clear plan for continuity in the event of an unexpected departure or retirement, your company could lose its competitive edge or fail altogether.
This responsibility should not be done once and then forgotten—it’s an ongoing process that requires attention and maintenance. This ensures all employees understand how they fit into your overall plan and that they have regular opportunities for professional development to potentially grow into their roles as future leaders within your organization.
If you’re thinking about selling your business but aren’t sure where or how to begin, talk with a financial advisor in Washington D.C. about succession planning.
Work with a financial advisor in Washington D.C. at Brown | Miller
To ensure that your business is well-prepared for any type of succession scenario, working with a financial advisor in Washington D.C. who can help guide you through the process is essential. Brown | Miller has been helping people like you plan for retirement for more than 30 years, so we know what it takes to get started!
