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.
All successful businesses, big or small, have one thing in common – Extensive business knowledge. In big organizations this knowledge can reside in entire teams, or units. In small organizations such knowledge is restricted to the people who founded the business, and maybe a few key employees that drive company strategy. In either case, scaling and sustaining organizational growth might be difficult, if the knowledge discovered, collated, and curated by the team is not stored for future reference. And that is why it is important to have Knowledge Repositories.
Before going any further, let us understand what knowledge means to a business. Business knowledge is a sum of skills, experiences, capabilities and expert insight, which you collectively create and rely on, in your business.
Knowledge can exist in many forms, but can be broadly categorized into:
- Tacit knowledge – Personal know-how or skills rooted in experience or practice (Eg. Skill, Competency, Experience).
- Explicit knowledge – Articulated knowledge recorded in documents, memos, databases, etc.
- Embedded knowledge – skills and understanding locked in processes, products, rules or organizational culture (Eg. Informal Routines, Codes of Conduct, Organizational Ethics).
Your understanding of what customers want, combined with your workers’ know-how, can be regarded as your knowledge base. Storing, searching, accessing and using this knowledge in the right way is together known as Knowledge Management (KM).
At its core, KM has important implications on decision making in an organization. Effective KM supports the process of decision making and strategic planning and makes it possible to create, transfer and apply knowledge at different levels in a coherent and productive way.
All of this is sounds great, and we can look up to major organizations such as Microsoft, Amazon, etc. for how they manage knowledge. However, implementing this in small businesses might create some challenges.
To do it right, a small business should
- Start with thorough research to find the right tools for knowledge management
- Implement these tools, without shying away or getting intimidated by new technologies
- Thorough documentation goes a long way in Knowledge Management such as developing SOPs and guidelines of workflow.
- Lastly, simple creative measures such as mentorship programs and discussions ensure effective flow of knowledge sharing and develop awareness amongst employees.
All the efforts of Knowledge Management are pointless if it is not safeguarded and backed up. A surprisingly unsettling statistic shows that 60% of companies that lose their data will shut down within 6 months of the data disaster. In addition to replacement time and irretrievable data, catastrophic data loss can destroy client confidence, leading them to take their business elsewhere. Retrieving the data requires an embarrassing explanation, and lost data could even lead to lawsuits.
Given the risk loss of data poses, it is important for every business to have a reliable backup solution. If your business has physical servers, backing up these entire systems are critical. As a small business owner, this should not be a big task once you have a proper plan. Backups can be created using two basic methods: file level and image level. File level is perfect for backing up files and folders on your file server. Image-level backups are perfect for when you want to protect an entire system at once. Backups can be done in full, incremental or differential manner. A right backup strategy would also include backups such as Cloud Backup, Encryption of Data In-Transit, 3-2-1 Strategy, and Testing Backups.
Knowledge Management helps you run your business more efficiently, decrease business risks and exploit opportunities to the fullest. So, treat and safeguard your organizational knowledge as carefully as you would a sack of diamonds. Because it is every bit as valuable or more.