While we launch small businesses to achieve our personal goals of self-employment and earning a nice living, for most people, there’s also a dream of creating a venture that’s around for the long term and extends beyond our reign.
We must pay attention to multiple success factors to make this happen, including choosing the right products or services, surrounding ourselves with the best team, watching cash flow, and marketing.
One element, though, that not enough entrepreneurs consider is succession planning. If you want your business to be around for decades, you need to create long-term strategies. Consider who might take over running the firm when you retire or if you can’t work anymore and how you’ll train them. Succession planning isn’t a one-time exercise or something you can sort out in a day. However, there are tips you can follow to help ensure the venture you’ve poured your heart, soul, and likely cash into will still be running years into the future.
Don’t put off your succession planning until the last minute. This process takes time, and you’ll need at least 12 months or even a few years to develop the right strategies and implement them, including training people to take over. If you hope to sell your business to a suitable buyer, it can take quite a while to find the right option here, too. Giving yourself plenty of time to handle succession planning will save you and your team stress and increase the chances of favorable outcomes.
Get Clear on Goals
Early on, get clear on your goals for the future of your venture. Know where you’re trying to head with the business, how you want to get there, and what threats and weaknesses may get in the way of these objectives. When you know your goals, you can plan and strategize accordingly.
You should imagine the type of leader you hope to succeed you, too. What kind of person(s) are you looking to help the company moving forward, and what do you hope they accomplish? Knowing your dreams here will help you identify the right new leaders to train.
Plus, work out your personal goals. That is, when do you hope to retire, and what type of income do you wish to have available to you? Do you plan to move from full-time work to part-time work for a few years, transitioning slowly, or is it your preference to find someone to run things ASAP so you can start getting to your lifestyle goals soon? Are you interested in staying involved in the firm in some capacity, such as a board member, or are you happy to remove yourself altogether?
Develop a Transition Plan
Once the above factors are sorted out, it’s time to develop a comprehensive, step-by-step transition plan. Determine a timeline of likely events and ideal strategies to get yourself out of the business and the new leaders comfortably and confidently taking over.
The plan you create should look at many specifics, such as who will manage or own the firm in the future, the rights and responsibilities of the key players, and how you’ll train them. If you’re hoping a family member or two will take over the venture, it’s vital to detail out whether they’ll receive full or part ownership status as a gift or bequest or will buy your share of the firm and, if so, for what price.
There’s also the marketing and PR side of things to plan for to ensure the changes don’t too negatively impact the business. Consider if you want the leadership evolution to coincide with a whole new look and brand for the company or a critical product launch, too.
As you get ready to hand over the reins, take steps to get the valuable knowledge in your head out and documented. Formulate procedures, create checklists, and store precious data on the cloud via a platform such as Amazon’s popular S3 buckets system, so other team members can easily access and use it. Thinking through all these elements will help not just the new leaders and remaining team to survive and thrive but also the business itself.
Obtain External Help
Be open to external help as needed when handling succession planning. For example, it often pays to seek advice and information from suitably qualified financial planners, accountants, lawyers, and business valuers. You might also chat with other entrepreneurs who have retired from their ventures and gone through the process you’re about to embark on.
Succession planning is an intensive process that you don’t want to get wrong. Following the above tips will help you steer your business forward positively and make you feel you’re leaving the organization in the best way possible.