Succession planning is a term that gets thrown around and can mean a lot of different things. There is the orderly succession planning that happens when you expect to run your business until retirement, and you give thought to an ESOP, selling your business, or passing it on to your children. I’ve watched some very measured and well thought out transitions occur over a period of years, training up those within a family who will take over. I’ve also witnessed some delayed and sketchy planning occur, which creates uncertainty and pain, not just for those who are directly involved, but for employees who don’t know what to expect. Lack of clarity never created a smooth path.
There is also succession planning that should happen as part of your normal estate planning….in other words, you should always have a succession plan to handle the unexpected if you’re a business owner. If you have a trust, are the interests of your business included in the trust so family can access funds and handle closing it down or selling it, etc? (See an estate attorney.) Who takes over if you become incapacitated? What if no other family member is involved, and you become incapacitated? What if a partner is the only other person who can sign business documents, and your family is at risk if you die or are incapacitated?
Succession planning also involves developing your people. Have you built the foundational strength in your team to pass leadership on? Are you ready to allow Millenials, who are a majority of the workplace now, to assist in keeping your business relevant? Can you “read the room” of your business well enough to know when it is in its best interests for you to step back? Have you designed the next phase of your life so you are stepping to something and not falling off something that has defined who you are?
Succession is way more than “What do I do if I make it to retirement?” Start planning today! Every business should have an up-to-date succession plan and review it annually for changes. None of us like to think we will get hit by the proverbial bus, but I can tell you recently I was on a flight that I wasn’t sure was going to land per normal. Thankfully, I am here today to share with you that it reminded me I’ve been moving the update of some key documents forward on my calendar for a few too many months now. I need to get them revised before the end of the year.
Once you’ve done the plan, it doesn’t mean it can’t be altered, but it should include risk management, leadership development, family considerations, disability and death. If you’re the owner, you do a disservice to your customers/clients, the people who serve them, and your family if you are ignoring succession planning.