Running a small business has many challenges, but with sound business planning, good risk management, excellent sales, marketing and delivery, a great team using efficient systems, your chance of success becomes considerably greater.
Once you’ve achieved that or become closer to achieving that point of utopia the next challenge looms that many of us despise the thought of – succession planning. Whether that is in the form of estate planning, planned voluntary succession or unplanned involuntary succession the challenge is real, it is important and for the benefit of the business owner and their family it needs to be addressed. But where do you start?
We’ve put together a seven point checklist to get the succession planning bus moving in the right direction.
1. Start with involuntary succession – if a life changing event for the business leader happened yesterday what would we be regretting today from a business point of view. Would we be wishing we had that life insurance policy finalised? Would we be annoyed that we never actually got that partnership agreement signed and now we’re going to have a bun fight with the deceased person’s family when we’ve always got on so well? Would we be infuriated that that simple piece of paper for our super nominations sat on the bench for the last three months without us looking at it? Are we going to be frustrated that we didn’t invest time in the young gun and next leader and now she’s not ready to run the business when she could have been if we had mentored and coached her?
2. Take immediate financial protection actions based upon the involuntary evaluation – put the life insurances in place, put the succession agreements in place, complete the powers of attorneys and wills. GET THE BASIC PAPERWORK IN ORDER! Remember, if it’s in writing it stops the fighting – this stuff isn’t hard, it just needs to be done.
3. Now that the formal paperwork is finalised start the move towards voluntary succession – work out what is required. If you are going to be replaced or choose to replace yourself what competencies or skills will need to be replaced. Start writing these down and make this document a live document – business changes, external & internal environments change so why would this document stay the same.
4. Tell the key people – succession scares most people, that’s the number one reason why we don’t deal with it so why do you think it’s going to be different for anyone else. Yes, there is some commercial confidence required from time to time but as soon as it is possible let the key people know. Your succession will impact them also so you will want them on board to make any transition as smooth as possible.
5. Find the team members you need to make succession successful. Some will come from your business, some from outside the current four walls of your business. Be prepared to make hard calls that may not always be the obvious call. Just because Bill is your current right hand man doesn’t mean he is naturally the next leader. On the other hand, if given the opportunity Bill may be the perfect next leader. The critical point is that you look carefully at these appointments and don’t just take the next in line option, take the best option.
6. Coach the next generation – once you’ve identified the next leader or group of leaders to make succession as seamless and successful as possible invest time, money and energy with them. They need you more than you or they realise. Rather than them making the same mistakes and the business and shareholders paying for those mistakes share openly the mistakes you made with the next leaders. Let them know you did not have a 100% strike rate at everything you did and, most importantly, the lessons you took from those mistakes.
7. Don’t be afraid to ask for help – for many people succession is only done one or two times in their working lives so it’s something fresh and new. That can be both exciting and daunting and is often only happening because you have been successful at doing what you do. So asking for help now can seem difficult because you are the successful one that got you to this place. Be prepared to seek out mentors, coaches and experts who have experience in this area – succession is a road not easily tread and there are many bumps but the right guidance can be critical to avoiding some of the nasty pot holes along that road.
If you would like to know more about your succession planning or to simply find out how ready you are for an involuntary event which could have happened yesterday, talk to the team at McMahon Osborne Group who can help you start this exciting and rewarding path.
Contact Lynda on (03) 9744 7144 or email firstname.lastname@example.org to make an appointment