In large organizations over the past ten years, as baby boomers started their retirement exodus, succession planning has reached critical levels. Generally, large organizations have had lots of smart HR people working with leaders to develop succession plans, implementing strategies to identify, retain and develop potential successors to step in as key people move on to retirement or into other roles.
Smaller companies need to be thinking about succession planning too. Unless a business owner is going to take down their shingle and call it quits, having a succession plan in place is essential to the success of the company. Whether that company is to be passed down, handed over or sold, the small business owner will benefit by managers thinking about what happens when they decide to give it up.
A quick survey of research studies on the succession planning suggests that fewer than 20 % of small businesses have done any succession planning and fewer than that have prepared a formal plan. Decisions and actions tend to be more effective when there is a plan to follow, so taking time for succession planning will make it easier to keep the business going after you’re gone.
To get started with succession planning for your small business, here is a list of questions small business owners should consider:
What are the 5- and 10-year goals for the company?
When do you intend to retire or do you intend to reduce your hours of work in the foreseeable future?
What do you want to do with the business? Will you sell it? Will you transfer authority and perhaps maintain an income?
What are the key roles in the company that need to be filled to keep the business running?
What do those roles do and what does someone need to know to perform well?
Is there anyone ready to step into those roles? Is there anyone to step into those roles already working with you or do you need to find the right people?
Will your successors need training and mentoring?
What do you need to do to assess if there are gaps in knowledge or skill?
Knowing what support is required, what are you prepared to offer to help them get ready?
Should you consider hiring someone to help assess your business (value, structure, key roles, etc.) and work with you to set a plan in place?