What is Succession planning?
How often has someone handed their notice in and it has surprised you leaving a huge hole and a big impact?
Or maybe you knew they might be leaving at some point in the future but didn’t really believe it would happen ……so had no contingency?
Maybe you want to step away from your business at some point in the future, perhaps retire or sell up and do something completely different, and feel you can’t because no one will care for and run the business like you do.
Dealing with any vacancy can be time consuming, costly and impact moral and productivity……. and a surprise vacancy even more so.
Regular succession planning can help minimise the impact on you, your team and the business.
Succession planning refers to the process of identifying and developing internal employees who have the potential to fill key positions within a business or organisation, as and when the current employees occupying those positions are promoted, retire, resign, or otherwise leave the company.
The goal of succession planning is to ensure the continuity of the business’s operations and effectiveness, by identifying and preparing future employees and leaders who can seamlessly take over the responsibilities of the outgoing team member. The process typically involves identifying key positions, assessing the skills and potential of existing employees, and developing and training them to take on more challenging roles in the future.
Why is it important?
Succession planning should be a critical component of any small business strategy, helping to ensure the long-term success and sustainability of the business, particularly for key roles that require specialised skills and expertise.
Here are 9 reasons why succession planning is important in a small business:
- Strategic planning: Succession planning supports strategic planning by aligning talent management with the businesses goals and objectives. By identifying the skills, knowledge and competencies needed for future success, businesses can proactively develop their workforce and adapt to changing circumstances.
- Continuity: Succession planning ensures that the business can continue to operate smoothly even when the key people responsible for its success leave, retire or are unable to work. Without a succession plan, a small business may struggle to transition to new leadership or the loss of a key employee, resulting in a loss of momentum, productivity, and profitability.
- Minimise risk: A succession plan can help minimise the risk of unexpected events, such as the death or disability of key employees or owners or the risk of critical positions being left vacant or filled by unqualified individuals. By having a plan in place, the business can ensure that it is prepared to manage such events and minimise the impact on the business.
- Retain talent: Succession planning can also help retain key talent within the business by providing a clear path for career progression and development. Employees are more likely to stay with a company if they see opportunities for advancement and growth.
- Developing talent: Succession planning provides opportunities for employees to develop their skills and prepare for future leadership roles. This can increase employee engagement and retention, as well as support the businesses long-term goals.
- Increase employee morale: Succession planning can increase employee morale by demonstrating that the company is invested in the development of its employees and has a clear plan for the future. This can lead to greater job satisfaction, loyalty, and commitment to the business.
- Identify gaps: Succession planning provides an opportunity to identify skills, knowledge and behavioural gaps within the business and address them through training and development programs. This helps ensure that the business has the talent and skills it needs to achieve its goals both today and in the future.
- Increase value: A well-executed succession plan can increase the value of the business by demonstrating to potential investors or buyers that the business has a clear plan for the future and is well-prepared to manage leadership transitions. This can help attract investors and increase the sale price of the business.
- Maintain company culture: Succession planning can help maintain the company culture by ensuring that the right people are selected to lead the business. This helps preserve the values and vision of the business, which can be lost during a leadership transition.
Succession planning can also bring personal benefits to a small business owner, such as:
- Peace of mind: Knowing that there is a plan in place for the future of the business can bring peace of mind to a small business owner. They can be confident that the business will continue to thrive even after they retire or step away or step down from their role.
- Flexibility: Succession planning can provide the small business owner with greater flexibility in their retirement or exit plans. With a clear plan in place, the owner can choose when to retire or exit the business, rather than being forced to stay in the role longer than desired due to a lack of suitable successors.
- Better valuation: A well-executed succession plan can increase the value of the business, making it more attractive to potential buyers or investors. This can result in a higher sale price or a better return on investment for the small business owner.
- Improved reputation: Succession planning can improve the reputation of the small business owner, demonstrating that they are a responsible and forward-thinking business leader. This can lead to greater respect and recognition within their industry and community.
- Legacy preservation: Succession planning can help preserve the legacy of the small business owner by ensuring that the business continues to operate according to their values and vision. This can be an important consideration for small business owners who have built their business from the ground up and want to ensure that it remains true to their original vision.
Investing in succession planning, will ensure a smooth transition of leadership, protect personal financial interests, and leave a lasting legacy for the business you have lovingly built.
Points to ponder:
- What resonated with you most?
- What would you do if a key person left your business suddenly or was unable to work for a very long time?
- What would a succession plan afford you in your business?
- Would you like a strategy call to talk it through?
Book a call here – Book a Strategy call now