Business Succession Planning

Written By 
,  
Commercial
Feb 1, 2023
|
Updated 
10:00 am
 
ET

Regardless of the size a business, succession planning is not only to replace a business owner, but it protects a business if a key employee should resign, is fired, becomes ill, or passes away. Having a plan is part of business continuity. It provides security for your business, your employees and your customers.

Protecting Your Business

Small businesses are generally more vulnerable when it comes to succession planning because there are fewer people involved in the business. This means there may be less skilled people who may not be ready to fulfill a larger roll. Identify people who have potential and take them under your wing. If anything should happen, they should be ready to take over in a case of an emergency.

In larger companies, there is a lot at stake when there is a sudden loss with no succession plan, sometimes causing a lot of chaos. Like any size business, people could be without jobs, and customers who rely on your goods and/or services may experience a ripple effect, possibly impacting their plans and/or customers. A large company can greatly benefit by putting in place a training program that gives high potential employees the ability to learn more about different groups. In the end, having experienced and capable employees ready and willing to take on new leadership roles is vital to an organization.

Motivate Employees to Learn

Once you identify individuals who have potential, you should put training in place to help that person build skills and gain the experience necessary to take on a specific role. While in training, business owners and managers should recognize possible competency gaps in employees. Once these gaps are identified, and you still see great potential, you can focus the training on building up the weak areas.

A big budget isn’t always needed to prepare employees to step into a larger role. For smaller businesses, you could implement a shadowing program or hands-on training. Larger companies may implement the same, but they also have the budget to do more in-depth training, hiring professional job coaches, or mentors. There are also programs where employees are required to look into a crystal ball and ask themselves, what else do I want to learn in this company? It becomes a requirement that each employee sets a goal to train, shadow or work on a project in a different department. This is a great way to retain employees should a department close, or it’s also a pathway for them to move up in the company.

Business owners should recognize that without a strong succession plan in place, your business may not continue once you are not able to run it yourself. When you do take the time to pick a successor carefully, it ensures your business will keep on operating and your employees won’t be left unemployed.

Owner Succession Planning

Estate planning and how your business is handled after you die is an effective way to prepare for end-of-life issues. Having a clear plan that is communicated to your leadership team and family will prevent any confusion as to who will carry on your business should you pass away. Planning ahead can result in a smooth transition between owners and successors.

You’ve spent years building a business, and without a succession plan, the brand and reputation you’ve personally created may be at stake. Having someone stepping in your shoes, who is not familiar with your company could risk everything you’ve worked for. The person may not understand your vision, mission and values, potentially harming your company’s brand in the long-term. This is true for both small and large businesses.

No matter how long you have been in business or whether you operate a large company or you’re a mom and pop shop, having a business succession plan is vital. Everything you’ve worked for may die with you without a plan in place. Contact a Firstrust Bank Relationship Manager who can help you with your business succession plans.


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