Secure Your Family Business…
Develop a succession plan
Succession planning in business is vital to the sustainability, growth and longevity of any family-owned business, helping to protect its future while ensuring that leadership transitions occur with minimal disruption.
However, transitioning control within a business is never an easy task – this applies to both personal and business matters.
Whether it's ownership, management, or another crucial role, it's vital not only to learn how to let go when necessary but also to ensure that someone is prepared to step up, with the right support, skills and knowledge.
Succession planning helps develop a pipeline of future leaders and ensures alignment with your family’s business and personal values and goals.
What is Succession Planning?
Succession planning can be broken down into two key areas:
- Ownership succession and
- Management succession.
The right candidate for each of these roles may be the same person, but more often than not, they won’t be – and your plan should consider this.
Your succession plan should clearly outline who will fill critical roles and what steps need to be taken to ensure a smooth transition.
Whether you plan to exit the business or pass it on to the next generation, a well-thought-out succession plan ensures you have the right processes and people in place, at the right time.
Successful businesses share some key characteristics: clear and effective communication and strong governance practices. They recognise that basing succession planning on assumptions can lead to failure, so they make sure to engage in open conversations with relevant stakeholders and family members, ensuring mutual understanding and clarity.
Moreover, they understand how succession planning intersects with other business strategies, such as the business strategic plan, talent development, and even family charters and estate plans. These areas must align to achieve long-term success.
Key Considerations for Succession Planning
No matter the size or stage of your business, there are several key factors to consider when planning for succession and business continuity.
- Planning for Exit
Succession planning is an integral part of realising your future plans for the business. The importance of clarity in your goals cannot be overstated, especially when it comes to your exit strategy. No business owner wants to reach a point where they’re ready to step away, only to find they haven't prepared the right people to take over.
- Knowledge Transfer
Many business owners hold vital knowledge that is crucial to the business’s success. If something were to happen to them unexpectedly, this knowledge would be lost, potentially leaving the business in a difficult position. It's essential to ensure knowledge is transferred ahead of time – not just verbally to potential successors, but also documented in procedures, policies, and information guides.
- Identifying Future Leaders
The right person to replace an owner, manager, or key team member may not always be the obvious choice. Similarly, the person you consider an ideal successor may not share your passion or values for the business. Objectively assessing potential successors and ensuring they have the necessary knowledge, and professional development is key to succession planning. Identifying and nurturing future leaders as early as possible is crucial.
- Developing and Retaining Successors
Once you’ve invested time and resources into developing the next generation of leadership, it can be tempting to offer them an ownership stake to retain them. While this approach can be effective, it’s important to carefully consider the long-term impact of giving up ownership. Have you done everything possible to ensure a positive workplace culture? Are you regularly communicating with your successors about their goals and your plans for the business? These are essential questions to address as you work to retain your top talent.
- Steps to Best Practice Succession Planning
Although every business is unique, there are several universal steps you can take to implement a best practice succession planning process:
1. Assess the Current Situation
Engage with relevant stakeholders to understand the current roles and responsibilities within your business. What are the personal and professional goals of each key person? What are their ideas for the future of the business? Align these discussions with the business’s strategic and operational plans to ensure clarity around succession.
2. Identify Gaps and Necessary Actions
Identify the gaps between where the business currently stands and where you want it to be. Do you have the right people in place, or do you need to recruit? What skills and development will your team members need to step into leadership roles? Are job descriptions in place for all key positions? And do the timelines for your goals seem realistic?
3. Plan to Achieve Your Goals
Based on the information you've gathered, break your goals down into short, medium, and long-term categories. Develop a roadmap for achieving those goals, with clear milestones for policy development, skill acquisition, or leadership transitions. Flexibility is key in case of unforeseen challenges but stay committed to your overarching objectives.
4. Continuously Review and Adapt
Succession planning is an ongoing process. Regularly review and update your plan to ensure alignment with your evolving business strategy and goals. Schedule periodic reviews, at least once a year, to make sure the succession plan remains relevant and effective.
Expert Guidance in Adopting a Succession Plan
Adopting a unique succession plan requires careful planning and the right expertise.
At KS Partners Accountants & Advisors, we have extensive experience working with successful family-owned businesses to adopt a clear succession plan.
Our process ensures you identify the right people, develop their skills, and ensure clear communication and governance practices are in place to secure the continuity of your business and safeguard its legacy for the next generation of family and leaders.
Contact us to explore how we can support the development and implementation of a unique succession plan tailored to your unique needs and objectives.
