Succession planning shouldn’t be something you leave until you’re ready to step away from your business; early and effective planning should be part of your strategic process from the beginning of your business journey. It’s just one of the exit strategies you can choose from, where a Business Mentor can offer guidance. By keeping your eye on succession as an end objective, you’ll help ensure the legacy of your work pays off.
Succession is about securing the future
Succession planning can help avoid disruption or even potential closure when the leadership of your business changes. It helps staff, suppliers, and customers to retain trust in your business so that everything you’ve built keeps paying dividends, even without your continued input.
The right time to start thinking about succession planning is now, even if leaving seems a long way off. Too many businesses risk addressing succession until it’s too late – in fact 81% of Kiwi businesses don’t have a succession plan at all, according to ASB.
Business Mentors, such as Angela Finucane, can help you stand back and see where skills and strategy gaps are so you can plan. They know what it takes to work on this alongside the day-to-day challenges of running a business.
Angela says, "I know first-hand that business owners get drawn into managing operations and 'firefighting’. When you're bogged down by the day-to-day, it's hard to retain perspective.”
Sound succession planning starts sooner than you expect
It can help to think about a timeframe and milestones for when you want to step back from your business. Unfortunately, timing may not always be in your control, so have a contingency plan in place so you are always 'sale ready'.
Damian Lawrence, Co-founder and former Upstart Venture Explorer of Sure Match at ASB says the first vital step is to determine your goals — business, professional, and personal — and ensure all three are aligned. It's a good idea to write them down and keep track of progress.
Damian encourages businesspeople to make goals for when they’ve stepped back as well. What will you do once you have moved on? It can be emotional, so preparing will make the transition easier.
It’s not only who you choose, but also how you help them
Choosing the right successor is a critical decision. For peace of mind, seek someone whose values align with your own.
“Make the time to identify potential purchasers by thinking broadly about who might be interested. Maybe an existing supplier, customer, competitor, employee, family member or even a strategic investor,” suggests Damian.
Establishing a successor is not just about handing over the keys; it's about sharing the knowledge and connections that have made your business thrive.
Even if your successor has been in or around the business for a while, they'll still benefit from help to hit the ground running. Creating a transition plan with specific activities and steps can help them ramp up their understanding at a manageable pace.
The new leader will have to build their own relationships with your team, customers, and suppliers. Helping with introductions will give everyone a sense of confidence.
Communicate with compassion and clarity
Communicating your succession plan is key to its success. Transparency helps manage expectations, maintain trust, and keep the sailing smooth. Your communications will be most effective if you consider how succession will impact people.
"Stakeholders range from shareholders, directors, employees, family members, customers, suppliers and the broader community. Potentially, every group needs a different approach. The earlier you know and plan this, the better," says Damian.
Don't wing it; bring in the pros.
Navigating the complexities of succession planning often requires professional advice. Lawyers, accountants, and business advisors can provide technical counsel.
Your bank and your Business Mentor are great places to start for guidance when thinking about succession. They can bring strategic insight but also vital support and encouragement.
A thoughtful succession plan is a necessity for every small business owner who wishes to secure their legacy and ensure business continuity. Ready to begin? Find your mentor today.
