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When Biden stepped aside from the presidential election, it served as a reminder for entrepreneurs that a succession plan is vital. Find out how to set one up. [[{“value”:”
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It was only a matter of a few weeks from when Joe Biden stumbled in his presidential debate with Donald Trump to when he dropped out of the race. Yet, within only a few days of that decision, the Democratic party rallied around Vice President Kamala Harris as his successor in the election.
One reason for the quick accession of Harris is that the U.S. Constitution takes succession seriously. Yes, it’s designed to produce an alternate president, but it’s that very succession planning that is the point; because there is a vice president who knew the ropes, it was far easier for Harris to step into the role of presidential candidate so quickly.
If something unexpected happened to you, or other vital executives of your business, who would take over? Is your business prepared to go on without you or them? For too many small businesses, the answer is “no.”
Why small businesses need a succession plan
A succession plan is vital for the longevity and stability of a small business. It ensures the company can continue to thrive even after, say, the death, incapacitation, or other unexpected departure of key players. Without a solid succession plan, the business can be lost in an instant. Unfortunately, roughly two-thirds of family-owned small businesses do not have a succession plan in place.
The importance of succession planning
There are two purposes of a succession plan:
A succession plan helps the business prepare for the unexpected departure of an owner or other key leader.It also strategically helps develop talent within the business to ensure the continuity, stability, and profitability of the business.
That second point often gets overlooked. One of the key benefits of having a succession plan is that it helps identify potential leaders within the business and provides them with the necessary training and development to become the CEO or other organizational leader.
In turn, this process not only prepares them for future roles, but also boosts engagement and retention; employees who see a clear path to advancement are certainly more likely to remain loyal and committed to the business.
But beyond that, and maybe most importantly, a succession plan will allow a business to navigate through times of crisis much more smoothly. Whether it’s an unforeseen death, another emergency, or even a planned retirement, having a succession plan in place ensures a smoother transition to the next generation, and it helps ensure that business operations are not disrupted more than necessary.
Steps to creating a succession plan
Creating a succession plan may seem daunting, but it can be broken down into five manageable steps:
Identify key positions: Start by identifying the critical leadership roles within your business. It may just be the CEO who may need to someday be replaced, but it may also be VPs, sales leaders, executives, etc.Assess possible candidates: The next step is to identify employees who would likely best fill these key positions. Consider skills, experience, and leadership qualities. Now, perhaps in a small family business, the successor or successors are obvious, but even so, it’s important to have open discussions with these employees about their career aspirations and willingness to take on future leadership roles.Provide training and development: This step is key. Once potential successors are identified, the company needs to invest in their development. After all, they can’t succeed as a successor if they don’t know how to do the job. This entails meeting regularly with the person who currently holds the position, as well as training, mentorship, and possibly even leadership workshops. You want to empower the identified successor with the skills and confidence needed to succeed when the time comes.Document the plan: Clearly document your succession plan. Outline the process for each key position. Include timelines, goals, training plans, and any contingency plans for unforeseen circumstances.Review and update the plan regularly: A succession plan should not be a one-time effort, rather, it is a living document. It needs to be reviewed and updated regularly to reflect changes in the organization, as well as the individual development of potential successors.
Entrepreneurs start businesses with, among other things, a legacy in mind. While smart and laudable, that legacy may never come to fruition without a solid succession plan.
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