Why You Need a Succession Plan

There is a 100% chance that you will leave your business one day, sometime in the future.  When that will be is anyone’s guess. 

“Succession Planning often results in the selection of a weaker representation of yourself.”
 Peter Drucker 

The one thing that business owners tend to forget is that they aren’t immortal.  Let’s face it, not just business owners forget this.  Over 50% of business owners leave their business because of unplanned circumstances – death, disease, disability and, sometimes, divorce.  The first 3 are the big ones.  How well-equipped you leave your business has an enormous impact on the future value of it.  It’s worth asking, “What would happen if I wasn’t able to work?”  

Effective succession planning makes sure a company always has the right team in place just in case there are any unexpected changes, especially to the leadership.   

Failing to plan for succession leaves your business worth less, and in some cases that can mean literally worthless.  Succession planning builds in resilience and adaptability.  A succession plan is good insurance against the unexpected and while it is time-consuming, there are significant benefits for your business: 

Risk Management 

Succession planning is the equivalent of an insurance policy for your business.  You have no idea what might happen tomorrow – to you or your family – so having a backup plan is worthy of the effort.  Equally you might have a great team right now but what happens if one of your key employees decides to go to Tibet to “find himself” or leave to set up their own business.  You can’t stop them leaving but you can be ready. 

Think of succession planning as maintenance for your business, in the same way that an airline always maintains their aircraft even though they very rarely crash.  With succession planning you are looking for the next leaders in your business and spending time getting them ready for when they need to step up.   

Increases Employee Engagement 

Engaging with employees and letting them know there is a plan for their progress encourages them to share their aspirations with you.   

Employees can decide whether that is the route they wish to pursue and develop new skills in advance of the change in role. It’s a great motivation and retention tool which cuts your recruitment costs if you get it right. 

If your existing team has no wish to progress or they simply don’t have the skills and attitude, you can make plans for external recruitment.  With a succession plan you know what you are going to need in terms of people and how to invest in your existing team to develop them into the roles they aspire to.  

Succession planning goes hand in hand with in-house mentoring and development of employees.  As junior members of the team are developed into senior roles, they can ask questions about how things work – and why.  This means that there is a review of processes and procedures through challenge and questioning and junior members of staff bring new insight into the organisations established practices. 

Reinforces Company Culture 

When you recruit from within you are reinforcing the company culture, behaviours, and legends.  The caution here is to reinforce positive cultures.  Whilst there are benefits to bringing in “new blood”, maintaining values and being dialled into the purpose or mission of the business is often easier from within. 

Strategic Planning 

If you build a succession plan, the chances are you are looking at all the strategic aspects of your business.  You’ll also engage with your employees at a level that is not normal in most small and medium size businesses (or many large ones for that matter).  Communication with your employees on all matters is one of the keys to success. 

“True leaders practice the 3 RR’s – respect for self; respect for others and responsibility for their actions. 

With a strategic plan which sets out goals and targets that are communicated to your team, you are already in the top 20% of all businesses.  With a team who understand what they need to do to have a positive financial impact on the business and how achieving it affects them, you’ll have a business that is worth more and give you and them a richer, happier future. 

Creating a career development path for employees to take over from their senior colleagues means years of hard-earned knowledge about the business won’t walk out of the door if there are retirements, leavers or, at worst, unexpected events of a more tragic nature. 

A succession plan helps your company grow while you reduce vulnerabilities in the business, improve process, encourage innovation, develop team potential, and reduce employee turnover. 

Are you ready to leave. your business (no matter when it happens)? Click here to contact Christine by email alternatively you can book a call with the Business Mentor of the Year 2020, author and speaker. Who helps business founders get their businesses exit ready so they can enjoy a happier, richer future.  She saves them THOUSANDS and increases the value of their businesses by MILLIONS.