4 Elements of a Strong Business Succession Plan

A business succession plan is something that nearly all business owners understand is a crucial part of their company’s long-term success. The disconnect here is that few entrepreneurs actually have a written, documented plan that accomplishes everything needed of an effective business succession plan. To be fair, many business owners cannot possibly imagine a world in which they are not their company’s hands-on, fearless leader. For the purposes of giving business owners an idea of where to start, we have provided some key points to address when drafting a plan. 

  1. Long-term focus and goals. In the early days of your company, you probably were taking it one day at a time and just trying to keep the lights on next month. Gradually, though, your successful enterprise reached a period of stability. But how far ahead should you look? A good rule of thumb is 10 years. How many people would you like your company to employ at that point? What do you want your client base to look like? Once you have a concrete vision of where you want to go, work backward from there and address how you are going to get there. A few midpoint goals 2-5 years out is a good idea to have as benchmarks. 
  2. Strong pool of succession candidates. Having a long-term vision is a great start, but who is going to get you there? Sure, you’ll be responsible for selecting candidates and ultimately choosing a successor, but having a pool of candidates who are already familiar with your company, its values, and the overarching culture gives you a significant head start. 
  3. Methods for retaining key employees/candidates. Turnover is inevitable in any organization, but you can take steps to minimize it. Having a strong Human Resources department can help, but as the leader, you have the ultimate responsibility for making this happen. Offering competitive benefits, performance-based bonuses, and other incentive plans are often effective at keeping key talent. Remember, it doesn’t matter how well you are training your potential successor; if they jump ship, then you have only succeeded at helping them lead a competitor. We have another blog post on this specific issue: https://soterian.com/key-employee-retention-plan/
  4. Collection of outside experts. You know your own business better than anyone else, but you need other professionals to help you bridge your professional goals with the technical side of things. For example, how exactly are you going to transfer your ownership to your successor? What are the tax implications of doing it one way as opposed to another? This is where third-party experts can help. 

Conclusion

Every business’s succession plan is entirely unique; the information contained in this blog is only intended to serve as a general guide. If you haven’t gotten around to making a plan for your eventual exit, then you risk the survival of your company. Remember: you won’t be here forever, but your business can be with effective planning. If you need help optimizing your small business, Soterian wants to help. Give us a call today at 704-755-5145 to get started.

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At Soterian, our goal is to help business owners like you think bigger. Bigger than today, bigger than your business, bigger than yourself.

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