We’re continuing the topic of family business succession planning today. Once you’ve decided who your successor is, it’s time to start planning. Done well, a family business succession plan can let people know who the new leader will be, bring them into their new responsibilities slowly, and allow you to step back from the business over time.
Planning is Key
A succession plan is something that must be set up and executed before you want to leave the business permanently. You don’t want to simply name a successor and then continue as normal until one day you leave. Abrupt transitions are difficult for everyone.
Instead, plan ahead and allow your successor to slowly increase their role in leading the business. This allows them time to get used to their new role, make mistakes while you’re still there to cushion the impact and find out if this is truly a good fit.
If your successor turns out to lack the skills or ability you thought they had, then you still have time to make changes, choose a new successor, and begin the process again. Starting over may be frustrating, but it’s far better than leaving your company in the hands of someone who isn’t ready or able to take over.
5 Keys to Successful Family Business Succession Planning
If the idea of planning for a successor in your business leaves you intimidated, you’re not alone. Fortunately, there are best practices that you can use from those who have successfully managed family business succession planning. Here are five important guidelines for being successful.
Make Sure Stakeholders Are Involved
Depending on the size of your family business, there are people who have a lot at stake when it comes to the future of your company. If you have employees, a board of directors, a co-owner, or a slate of executive officers, you have stakeholders that deserve at least a small role in the process.
You can leverage these groups to help you identify the skills required in a successor, to help you choose or vet potential successors, and to help you create the transition process. By including important leaders and staff, you’ll help ensure a smooth transition for your new leader.
Onboard the Successor Over Time
Rather than choosing a single date when you will step away from the company and hand everything over to the new leader, set up a timeline of increasing responsibility. This will help them learn the new skills they need and build deeper relationships. A sink-or-swim approach too often leads to sinking, which is not what you want for the future of your company.
Be Positive About Your Business Prospects
Being in business is hard. However, there are great things about it or you wouldn’t be in business! To set the stage for your successor to succeed, begin immediately with a practice of speaking well about the business. Don’t complain that your competitors are outpacing you and then expect a new leader to be eager to step up. Instead, talk about why you started the business and show your successor how you use a positive attitude to overcome obstacles.
Give the Successor an Option, Not an Obligation
Running a family business is no small task, and no one should feel forced into it. Even if you, your board, your employees, and your executives all think one person is a sure bet as a successor, that person should still have a choice. Don’t strong-arm someone into taking on a responsibility they don’t want just because you’re afraid you won’t be able to find someone else. No one does well in a job they don’t like, and you don’t want to leave your business in the hands of a reluctant successor.
Encourage the Development of a Variety of Skills
You may choose a successor because they are a master of an important aspect of business, like marketing or sales. However, being the leader of a company requires a skillset that is broader than one department. Encourage your successor to develop skills in operations, finance, sales, and more.
Most of all, don’t look for a successor that is a clone of you. What brought your business where it is today is not what will make your business successful in the future. Focus on bringing in someone who has or can develop the kind of skillset that the future will demand.
Having support from an outside third party is critical. Your board, employees, and fellow leaders will all give important insights, but none of them have the impartial view that someone outside the company can bring.
Don’t try to do family business succession planning on your own. You and those in your company see the business and the world in a specific way, and it may not be the most accurate reality. Instead, bring someone in who has experience in family business succession planning and let them help you.
Successful family business succession planning doesn’t happen overnight. If you want your business to thrive for generations to come, give me a call today!