Imagine you are the CEO of a company and have worked hard to build a successful organization. Over the years, through ups and downs, you are proud to say that your company has grown tremendously.
But what would happen to your organization if you retire? Or heaven forbid, something unfortunate happens to you? Would your organization still function properly? Would your business still be able to attract potential customers? What will happen to your employees if the business fails?
There are so many questions to be answered to run a successful business even after you retire. Hence building a Business Succession Plan is crucial to giving security and assurance to your organization as well as your other stakeholders.
A business succession plan makes sure that even after you pass away or retire, your business would still run smoothly. It is very important to create a document, step by step, that instructs your co-workers and employees on being well prepared for the event. The earlier you start to plan, the better it would be for the organization.
Selecting an appropriate candidate for your role can be a tricky thought. The key here is to be confident of the people you are hiring and knowing their strengths and weaknesses.
Succession planning is a process and not a particular event. It takes years of careful decision-making, iterations and finally selection. The selection process should not be biased and it should have the buy-in of all the senior members in your management.
After you have selected your candidates for the potential roles, it’s important to train them for the job. Similarly, the current senior employees need to be made responsible for the next generation of employees to take over the business roles from them. Once the selections are done, give clear instructions to the future candidates on how the structure should look like after the migration.
The other important part of succession is the funding and the financial management of your organization. Potential stakeholders of the company are vital to this decision process. You have to define a specific strategy on how the cash flow of your organization would take place. A legal agreement of buy-sell takes place which decides who will buy the shares of your business, the selling of the shares after you retire, and the value that would be paid for the shares.
In Small business or Family business, succession planning provides a significant improvement to the business fundamentals and improves the chances of survival in the long run. However, it’s very common to see relatives being hired for the post, which could create jealousy and disputes within the organization. To mitigate this issue, it would be wise to take the decision as an organization and generate consensus in selecting the right candidates for the job.
The bottom line is that by having a successful succession plan, you would be prepared for any eventuality that might take place. This plan would reduce the stress of your co-workers and your loyal employees and the organization will have a strong response. Also, knowing that you have selected the right candidates for the job, your business would run smoothly for long years.