If you were a writer on the HBO series Succession, you’d probably start this article with an introduction to some of the disasters ahead in your doomed attempt to find a successor for your business.
Fortunately, the real world doesn’t have that much drama. Succession might have a few complexities, but it’s achievable and necessary for any entrepreneur. Here’s how to sort out your business’s succession planning.
Do You Need a Succession Plan?
Most entrepreneurs don’t think about business succession planning until it becomes urgent.
And it’s easy to see why. Perhaps you haven’t had your business for long or have several decades before you hit retirement age. In that case, you probably think it’s not a priority.
However, as many of us realize, as we get older, plans change. What’s in the distant future can occasionally turn into an emergency. So it’s worth having something in place for your succession, even if you don’t feel you’ll need it for the foreseeable future.
The other reason to plan your succession is to get something down on paper. You can still change it in the future. However, it will help remove any ambiguity about how you want your business to continue if something happens to you.
What Are Your Options?
Succession planning is complex, so you’ll need to understand your options. Here are some of the entrepreneurs’ most common choices in their succession planning.
A typical succession plan is to pass your business ownership to a close member of your family, like a child or sibling. For this to work, you’ll need to speak to them, and you’ll need to get them involved in your business from an early stage.
If you don’t have a relative, you might have a trusted member of staff to take over from you. Most entrepreneurs who choose this path still maintain ownership of the company after the new CEO has taken over.
A management buy-out is where the most senior staff members will form a purchasing team and buy the business from you. That is sometimes a good option for smaller companies with a close, long-standing team.
Do you run a large or rapidly-growing company? You can consider taking your business public through an IPO (initial public offering).
You can decide to sell your business to a wealthy individual or another company. That is popular with website businesses such as blogs and eCommerce sites.
How Should You Create a Succession Plan?
There’s a lot to do when planning for succession. Here are the three most important tasks you’ll want on your to-do list:
Hire an Accountant and Lawyer: Always get legal and financial support. You’ll want to know how much your business is worth and protect aspects like intellectual property – you can find more info here.
Create Processes: Document all your operational tasks so that they are processes that other managers can follow. That will help with the smooth transfer to a different management team.
Train Your Successor: Even if your succession is some way off, it’s never too early to start training your successor. Start by getting them to shadow you in your job.
Succession Planning: Start Today
There will come a time when you’ll need to hand over your business, even if you can’t currently visualize spending your day playing golf. Succession planning will help ensure your business continues to thrive, whatever the circumstances.
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