Every company must face change. In a long-lasting business, the reins will eventually pass from one person to another, or, in the case of a family business, from one generation to the next. Unless you plan for change, it can be challenging, regardless of whether or not you saw the event coming. When it comes to succession planning, best practices make the difference between a company continuing to thrive in a period of change and an otherwise successful business crash-landing as confidence plummets. Implement succession planning best practices early and stay with them if the business is to survive.
While there are many succession planning best practices to consider, and each company’s situation calls for a unique approach. We have narrowed our advice down to three top tips.
Start Succession Planning Early
It is wise to remember that change is inevitable. Giving everyone in a company the most time possible to transition can help smooth over any major issues.
Not every part of a succession plan is predictable – a company leader may step down owing to a sudden health issue, for example. — but having the plan in place is much better than scrambling to figure out an exit strategy with no time to spare.
Again, each company is different. Early planning for a family business in which someone is already in training for leadership will look much different than a plan for a company where a new leader will need to be recruited and groomed. Whoever the new leader is, succession planning best practices call for not just identifying that individual, but:
- identifying the areas where he or she needs development,
- setting goals to ensure that development, and
- checking in regularly to ensure that the eventual new leader is prepared.
A leader should understand what challenges lie ahead, what resources are available, and what objectives the company might have. He or she should then use his or her experience and knowledge to bring the next leader on board. More time to hand over is usually better.
Prepare for All Aspects of Transition
If succession planning were solely about identifying talent and putting training into place, it would be a lot easier and faster to get it done. However, as with any major business or financial decision, succession planning comes with political and emotional concerns. It is rarely something that happens without challenging feelings, which is why it is important to prepare for those ‘messy’ aspects instead of hoping they will not be a problem.
For the current leadership, recognize that it may feel tough to let go, and that you may have to accept long-standing practices and traditions falling by the wayside. For new leadership, understand that the business was built on the backs of previous leaders. Honor that legacy, even as you begin to make your own mark. Each party has a valid perspective, and each may feel uncertain about the change. This is often all the more relevant if you are succession planning for a family business.
There may also be challenging emotions for those retiring from leadership as they face a new, post-business role. Generational wealth management and estate planning are key to ensuring financial security and peace of mind in this new phase of life.
Work with Professionals
It can be challenging for those with a strong stake in the company to look at exit planning objectively, whether that means testing various transition or succession options, or even valuing the business for a potential sale. That is where working with professionals is an important part of succession planning best practices.
Brix Partners offers both pre-sale planning and exit planning for companies anticipating a change. If succession looks like it will mean selling the business, we help our clients maximize value, organize systems and processes, and get the company ready for a successful sale. We can also analyze and test various exit and transition options as part of succession planning, showing our clients when, how, and to whom the company can be transitioned for best results.
We understand that, even as succession planning is underway, our clients are dedicated to the success of their life’s work. You can rest assured that we are equally dedicated to our role in implementing succession planning best practices.
Use our contact form, call us at 212-578-2048, or email us at firstname.lastname@example.org to get in touch with our team and find out how we can assist you in peacefully, successfully transitioning your business.