Succession Planning is an important task that any small business owner should undertake to ensure the long-term success and continuity of their business. What goes into that planning, and why does it all matter? We asked an HR expert to fill us in.
Building a successful business is the dream of likely all entrepreneurs, often it is their life’s work. When all the focus is on creating something great, there is little time for thought about what actions are needed if the founder, or a key player in the business, moves on.
When there is no succession plan in small and medium businesses, the impacts are felt financially, by the customers, and by the workers. It can be hard to rebuild that repour, internally and externally. Why else would you need to consider a succession plan? We asked Laboni Khan , an HR expert at Business Sherpa Group (BSG), to outline what impacts no plan has on a business, and where to start on your succession plan.
Elements of Succession Planning
Succession planning is a complex process requiring discipline, with business owners focused on identifying, training, and mentoring individuals who will assume critical roles within the organization. This process requires a deep understanding of present operations, from the clients the business serves, the goals of the organization, and the needs of the workers who keep operations going. These factors, and external powers like the economic situation or the market in which the business operates, provide data and lessons for training future leaders of the organization.
Succession Planning Strategic Benefits
Unforeseen events can impact small and medium businesses in more intense ways than others. When there is a succession plan in place, there is a preservation of continuity and harmony, and the owners don’t have to scramble to keep the business running and operational while juggling issues outside the business. This can avoid internal flares between competing family interests and provide continuity in chaos.
There are significant cost benefits that are associated with a succession plan. Replacing a senior position in an organization can be a lengthy process that takes up significant resources, sometimes up to 200% of a person’s salary. Even if you find someone externally, the competition for qualified talent remains intense and businesses might end up paying a significantly higher salary than they had budgeted for, as they have been painted into a corner.
This means that having an internal succession structure, and being transparent about it, engages employees in the growth and development of the business, which can help make a transition smoother and budget friendlier down the road. A succession plan delivers a message of support, signaling the business is invested in the growth of employee skills and careers internally. Employees want to stay in businesses where they feel the growth of their career is supported. The benefits are wide ranging, from increased productivity to reduced turnover.
Getting Started on Succession Planning
Should you start succession planning today? Yes! Whether your business is new or well-established, it takes some time to build a great succession plan, meaning the best time to start thinking about it is now. It doesn’t matter if you want to pass your business to an employee, family member, or external partner, assessing their qualifications against the business’ future-state can take years. Once you have created a succession plan, as a business owner, you can start the process to secure your company’s future and enjoy your retirement.