Succession planning is a valuable tool for both small and large businesses. Small businesses can utilize succession planning to better manage changes in leadership and ownership, while large businesses can avoid any talent gaps. A succession plan can keep your business acting proactively rather than reactively during its most crucial phase changes.
Understanding a step-by-step checklist for business succession can be the best way to ensure that everything is in order and prepared.
Define and Align Your Goals
The first step to any successful succession is clearly understanding where you want to go, what you want your business to look like down the road, and who you want to be involved with its growth. This is your chance to create a forecast of your company’s needs and what (and who) it will take to get there.
At this stage, you will also consider where you will be. This could entail selling the business, transferring ownership, becoming hands-off but still staying in some capacity, or handing over ownership to a business partner. Your choice of exit depends on your goals for yourself and the business, but each will require you to plan legally, financially, and within the business.
Start Your Succession Strategy
Defining your goals is one thing, but your next step is using those goals to develop a succession strategy for you and your business to follow. A succession strategy is a series of actions that help you align your goals with your overall plan. You will want to conduct a current business valuation and use that to help create your strategy, allowing you to answer questions such as where you want your business to be in a certain period of time and what changes need to be made to get to those numbers.
Your strategy should force you to consider what leadership roles you have or need, who will be in those roles, what risks are involved with business succession, and if your business will face any vulnerabilities during succession. Asking yourself these questions can help you create a concrete plan.
Find Potential Candidates and Provide Development
For a business succession, you must identify priority roles and dictate who will need to fill them. Not only will this have you questioning who will take over your role, but also who will move up in the company after that. You want to start considering potential candidates sooner rather than later to ensure enough time to provide proper development and training on their end. Additionally, if you are considering outside hiring, this is your chance to create thorough job descriptions and requirements to ensure the chosen individuals meet the expectations.
Implement Your Plan
Implementing your plan is not as simple as pushing a button and watching the pieces come together. During this phase, this is your chance to connect with professionals such as business attorneys and financial advisors to ensure your business succession will be as successful as you hope it to be and that you have no holes in your plan, both financially and legally. Once you’ve connected with the necessary professionals, you can implement your training plans or new financial strategies.
Review Your Succession Plan Regularly
The most important part of this business succession checklist is remembering that you are not finished once you check off number four. Business succession takes time, and in that time, individuals might change, or goals might shift. You must review your plans regularly with your shareholders, business attorneys, and financial advisors to ensure you are constantly headed in the right direction for yourself and your business.
Business succession is a significant step in anyone’s business, but it can be extremely successful with the right plan in place. If you have further questions or wish to partner with a business attorney to help with your succession, contact the team at Hartmann Law.