Fact: a business owner may be a phenomenal entrepreneur and yet may not be equally gifted when anticipating future threats to the future continuation of that same business. Consequently, if you want your family business to exist and thrive when you no longer run it, then you need to engage in succession planning sooner rather than later.
Business succession planning is more about avoiding problems than setting goals for growth. While you do want to set a general course for the enterprise you nurtured and grew, you also need to anticipate challenges that might arise 10, 20, even 50 years down the road.
This checklist can help you to avoid common miscues with your business succession:
- Face the situation and choose a successor. Although almost every business owner acknowledges the need for succession planning, very few people actually complete the task.
- Choose your successor based on the current and future needs of your business, and not on emotion. Business founders often select a family member or a protégé as the person to take the reins, but this decision can be a big mistake.
- Choosing someone with the same strengths as your own, might not serve the needs of your business, particularly in a changing marketplace. For example, your strong tech background might have provided the skills your startup needed, but a candidate with sales and marketing ability might be what your company needs going forward.
- Resist the temptation to set up competition among several candidates for the leadership role. This method of decision-making can result in a toxic workplace that damages relationships and hurts your business. The candidates might also sacrifice the future health of the business, in the name of short-term gains during the competition.
- If you have more than one person in mind for the top role, be honest and transparent. Decades of earned trust can be destroyed in an instant, if your best employees feel that you are hiding some of the facts and decisions from them.
- Shift your focus from what will happen to you when you step away from the business, to what will happen to your business. This approach can help you overcome your fears about the unintended consequences of a change in leadership.
- Many successful entrepreneurs build their identity around their organizations. It can be hard to walk away. You will need to redefine yourself and think about ways to craft the succession plan, so it is a win-win for all stakeholders.
- Create a succession plan that will encourage the new leader to stay. One of the top reasons why succession plans fail, is that the successor leaves the organization.
- Make sure you step away as scheduled. The best succession plan in the world will fail, if you do not let the new person do the job.
- Have a Plan B, in case the new leader fails, because 40 to 60 percent of all CEOs fail within the first year and a half.
- Realize your business will need to be nimble to survive in today’s market. Do not make the mindset of the organization too rigid to adapt to changing conditions.
Do not limit yourself to the items on this checklist. Feel free to consider other factors, depending on your business and its unique characteristics.
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