What exactly is succession planning? At a general level, succession planning is the process through which a business readies itself for changes in leadership positions. When done correctly, it allows for the identification and development of individuals to take on, and evolve the responsibilities of key roles inside an organization.
However, no two business succession plans are exactly alike. Each process must be tailored to meet the unique needs of the business. These needs may include, but are not limited to recruiting, employee shadowing, cross-trainings, and the hiring of an outside professional (ex: financial advisor).
What allows a business to function properly? It’s never just one thing. Rather, it’s the combination of several parts working together in harmony. But this harmonious relationship is only possible through strong leadership. And that’s exactly what a succession planning seeks to preserve – continuity in strong leadership.
Without the proper leadership, the entirety of your family business is put at risk. The company’s mission loses its momentum, improvements stop being made, communication becomes unclear, and valuable employees start looking elsewhere for opportunities.
When these things happen, a business begins to die. And it’s not just the bottom line that’s affected. The weight of regression is felt by everything your business touches, including your employees, customers, and community. All the people and causes you care about are put at risk by your inability to provide the same level of service.
For family businesses, the consequences can be even more dire. Blood relationships can be strained, damaged, and even ruined without proper succession planning. The improper hiring of family and friends can become sources of regret and resentment. Worse yet, your family’s legacy as a whole can be put into jeopardy.
With succession planning being so pivotal, it’s important to understand the barriers that typically stand in the way. Again, this will vary depending on the needs of the organization. But there are problems that commonly arise across the board. These include, but are not limited to:
Now that we’ve identified the hurdles of succession planning, let’s review how to get over them. That is, the best practices you can implement to ensure your business continues running smoothly.
For starters, let’s get clarity on your most precious resource – time! Just like planning for retirement, the sooner you start the better off you’ll be. And there are some solid general practices that will serve you well as you begin. These include, but are not limited to:
It’s not always easy to know when succession planning is necessary. But as we stated earlier, it’s always better to get started as early as possible. To avoid being caught off guard and underprepared come transition time, we recommend running through the following questions:
Does your business rely heavily on the performance of key employees?
Are you looking to fire any employees?
Is your business expanding in size or scope of services?
Do any of your employees have an interest in moving up in your organization?
Are you or any of your employees looking to retire in the coming years?
If you answered yes to any of these questions, it’s time to get started on succession planning. It can seem daunting at first. But if you know who to reach out to, you can hit the ground running on this vital process with plenty of confidence.
At Vertical Wealth Management, we have a clear understanding of how important succession planning is to family businesses. And we have a team of professionals that will serve as your succession planning consultants. With years of experience, they’ll be able to help you in transitioning leaders in and out of your organization’s vital roles.
If your family business needs help staying on top of what it does best, we’re here to help. Please feel free to schedule a completely free introductory call with our team here. And we’ll be able to help you through the entirety of the succession planning process for your family business.
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