You’ve run your own business successfully and now it’s time for you to leave. What now?
According to Forbes, succession planning has been defined as the number one responsibility of board members, however only 14% of directors had a detailed succession plan in place.
A succession plan outlines who will take over your business when you leave, either by retiring, leaving or death. Having a good succession plan will assist your business is transitioning smoothly if a new owner is appointed. Not only does it allow for a smooth transition, but it provides a framework for developing people and positions to advance the company. Succession planning is important as it plans for the future of your business.
The 4 Stages of Succession Planning
The four main stages of succession planning are; initiation, selection, education and transition.
In the initiation stage, potential successors learn about the business, specifically its guidelines, values and vision. In this stage the business owner speaks to the candidates about these main things.
In the selection stage, a successor is chosen among the other candidates for the job. In order to avoid conflict, some business owners will develop specific objectives and a job description for the succession, and whoever best meets those will be chosen. This approach will usually reduce the emotional aspect from the selection, especially in family businesses where the potential successors are siblings or close relatives.
The education/training stage usually involves a training program designed to allow the successor to gradually increase their responsibility and meet the goals of the business. In this stage, the business owner is also provided with the opportunity to analyse the successors abilities and performance.
The last stage is the transition, when the business owner moves out or retires from the business and the chosen successor takes over.
Advantages of a Succession Plan
There are many advantages of having a good succession plan in place. Some of these include;
- Allowing the leaders of the company to focus on the future;
- Provide an understanding of the company and locates areas for development;
- Keeps your business one step ahead.
More information? If you are looking for assistance in creating a succession plan for your business, or want to use our succession plan template, give us a call on 1300 023 782 or email team@cdrta.au.