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Business Succession Planning: 5 Steps to Help You Get Started

business managers meeting about business success planning

When you decide to leave your business, who will take over? It’s a decision most of us will have to face at some point. That’s why it’s important to have a succession planning strategy in place, whether you run a medium or small business.

This allows you to develop action plans for high potential candidates to fill key roles to ensure a smooth transition and strong business continuity in the long run, and so that your business remains in safe hands.

Here are five key steps to remember when devising your own succession planning strategy.

1. Identify key positions for business succession planning

Before making any major decisions, you’ll need to analyse your business plans in order to identify which key roles are crucial to your business’ growth.

You’ll also need to examine what kind of impact this will have on day-to-day operations and business revenue. Are there key employees within the business who could step into these roles or are there external candidates who might be more qualified?

2. Identify a potential successor

Essential to your business succession planning is finding a potential successor who’s highly-qualified and trustworthy, especially when it comes to a family business. Will it be another family member? An employee? A business partner? Or are you open to locating talent outside of the business?

To decide, you’ll need to assemble a succession planning team. You’ll also need to establish criteria that high potential candidates must fulfil in order to assume key roles. You’ll most likely find someone who has a similar background to your current employees or has had similar experiences or responsibilities in previous roles.

Your team should also expand their search across other areas and departments. It’s often a lot more cost effective to develop current employees for key roles rather than go to the trouble of hiring new people.

For larger businesses, human resources will be instrumental in identifying a successor, helping you respond to gaps and reducing the risk of a loss of business continuity. They should also challenge those in senior leadership roles to identify and develop the kind of talent that’s hardworking, reliable and diverse.

3. Decide when potential successors will take over

After selecting your potential successor, it’s time to draw up a clear timeline for development.

But when they will actually take over depends on the business itself. For some, a key role might need to be filled quickly, while for others, the transition date might still be a long way off.

Over the course of your succession planning, it’s good to build a strong rapport with your successor and inform them of your business’ overall vision, values, and general policies and procedures.

Other factors might also impact your decision to step down. What if you decide to leave earlier? Is there adequate enough training available for your successor? What if they leave to take on a different position or join another company?

The last year of your succession plan is a transition period for you and your successor. It’s also good to plan as early as possible so that you’re fully prepared to move on and can deal with any problems should they arise.

No matter who ends up taking over your business or when you decide to step down, succession planning is an ongoing process that will constantly change according to your business’ needs.

4. Provide career development options for your potential successors

Providing well-structured career development for potential successors will also make up a huge part of this timeline.

Prepare them for takeover by offering specialised education and training. Ensure you have your successors take part in project meetings, seminars and succession planning programs. Share with them valuable skills and expertise they’ll need through mentoring and hands-on experience.

Cross training can also be great for career development, where you train successors to work in several different roles outside of their usual responsibilities. Not only does this help carve out a more stable career path, it can also help employees become more productive and provide them with a wealth of knowledge and experience.

5. Commit to your business succession planning

From the moment you decide to step down to the final handover, you need to review your business succession planning on a regular basis. If circumstances change, at least you can take comfort in the fact that you’ve planned ahead.

It’s best to be transparent with potential successors about job opportunities. Although you might not be able to guarantee them key roles, you can still support their development and mould their skills over time so that they can grow into these roles if or when they become vacant.

Also evaluate metrics of success according to outcomes instead of process. Examples of this might include the number of critical positions filled by an internal promotion versus an outside hire, or measuring the percentage of promotions that come from your pool of high-potential candidates.

Most importantly, be realistic about your planning strategy. Keep the lines of communication open between you and potential successors. Carefully assess their skills and competencies, otherwise you risk putting forward a candidate who may not be right for the role.

When you have the right people and a plan in place, you can feel more confident that all the effort that went into building your business will continue to offer benefits to your customers and staff in years to come.

Author:

Business content for Australian SMEs. Sharing guides, growth hacks, and expert tips on finance, sales and marketing, and tech.

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