Your Succession Plan Is Not Just About You
January 05, 2018
|
Business Strategy
- Keywords:
- wealth management
- succession planning
January 05, 2018
|
Business Strategy
Leaders of growing companies are by necessity intently focused on the day-to-day growth of the business. Unfortunately, that means an important issue like succession planning often takes a back seat. While 50 percent of CEOs plan to retire in the next 10 years, two-thirds of them haven’t developed a succession plan.
Even people who don’t anticipate anything bad will happen to them still plan for the unexpected by preparing a will, yet entrepreneurs don’t make similar preparations when it comes to their businesses. For business leaders, leadership succession is one of those issues that never seems critical until it suddenly is. But the reality is that when you engage in succession planning, you’re actually preparing to take your business to the next level.
Whether you’re a baby boomer still leading the company or a Gen Xer starting your journey into entrepreneurship, thinking about that transition—planned and unplanned—is critical work that you need to do before you have to do it.
A Sound Business Plan
Succession planning isn’t just about the distant future; it’s about preparing for your company’s growth and long-term viability. When you start along the path of succession planning, you find yourself asking such questions as:
- Who is demonstrating leadership relative to new customer acquisition and new market penetration?
- Who in the organization has strong relationships with your customers?
- Where is innovation happening in the organization, and who leading that charge?
- Are there people within the organization who are prepared to take over the business?
- Are there family members who can be groomed for the role?
These are just some of the questions that lead you to determine whether your business is primed for growth and who you can engage in that work. These questions also provide insight to the vulnerabilities that exist in your operation. For example, you don’t want your head salesperson to be the only one who has relationships with your customers. You want to make sure each client is institutionalized within your organization through multiple points of contact so that employee transitions of any type do not affect client relationships.
Asking these questions can also yield unexpected valuable answers. You may have been under the assumption that your longtime head of sales is the logical successor, but in the succession planning process you discover that person is not the right one for the job because he or she is unable to connect and engage with the younger leaders in your company, which is a growing majority in employee ranks (a fact you might not have realized).
While having that discussion can be difficult today, the longer term ramifications of not having it will result in much more difficult realities in the future. A board of advisers can be a great help with the process because its job is to help you make the best decisions for the business, today and longer term, and those advisers are not as personally engaged with the individuals.
It’s Not All About You
When you’re leading a business, you have an impact on a broad range of stakeholders, which includes your employees, your vendors and—yes—your customers. So ensuring that you prepare your business to continue having a positive impact on those stakeholders long after your leadership reign has ended has far reaching implications.
Make no mistake, though: how you prepare for your transition can and will have personal financial implications as well. Transitioning your company can have substantial tax implications that often takes time to plan for so that you and your family can enjoy the next stage of that transition.
The benefits of engaging in the succession planning dialogue far outweigh the challenge of going through the process. The bottom line is: The more prepared you are for leadership succession down the road, the more prepared you are for taking your business to the next level in the near term.
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Leaders of growing companies are by necessity intently focused on the day-to-day growth of the business. Unfortunately, that means an important issue like succession planning often takes a back seat. While 50 percent of CEOs plan to retire in the next 10 years, two-thirds of them haven’t developed a succession plan.
Even people who don’t anticipate anything bad will happen to them still plan for the unexpected by preparing a will, yet entrepreneurs don’t make similar preparations when it comes to their businesses. For business leaders, leadership succession is one of those issues that never seems critical until it suddenly is. But the reality is that when you engage in succession planning, you’re actually preparing to take your business to the next level.
Whether you’re a baby boomer still leading the company or a Gen Xer starting your journey into entrepreneurship, thinking about that transition—planned and unplanned—is critical work that you need to do before you have to do it.
A Sound Business Plan
Succession planning isn’t just about the distant future; it’s about preparing for your company’s growth and long-term viability. When you start along the path of succession planning, you find yourself asking such questions as:
- Who is demonstrating leadership relative to new customer acquisition and new market penetration?
- Who in the organization has strong relationships with your customers?
- Where is innovation happening in the organization, and who leading that charge?
- Are there people within the organization who are prepared to take over the business?
- Are there family members who can be groomed for the role?
These are just some of the questions that lead you to determine whether your business is primed for growth and who you can engage in that work. These questions also provide insight to the vulnerabilities that exist in your operation. For example, you don’t want your head salesperson to be the only one who has relationships with your customers. You want to make sure each client is institutionalized within your organization through multiple points of contact so that employee transitions of any type do not affect client relationships.
Asking these questions can also yield unexpected valuable answers. You may have been under the assumption that your longtime head of sales is the logical successor, but in the succession planning process you discover that person is not the right one for the job because he or she is unable to connect and engage with the younger leaders in your company, which is a growing majority in employee ranks (a fact you might not have realized).
While having that discussion can be difficult today, the longer term ramifications of not having it will result in much more difficult realities in the future. A board of advisers can be a great help with the process because its job is to help you make the best decisions for the business, today and longer term, and those advisers are not as personally engaged with the individuals.
It’s Not All About You
When you’re leading a business, you have an impact on a broad range of stakeholders, which includes your employees, your vendors and—yes—your customers. So ensuring that you prepare your business to continue having a positive impact on those stakeholders long after your leadership reign has ended has far reaching implications.
Make no mistake, though: how you prepare for your transition can and will have personal financial implications as well. Transitioning your company can have substantial tax implications that often takes time to plan for so that you and your family can enjoy the next stage of that transition.
The benefits of engaging in the succession planning dialogue far outweigh the challenge of going through the process. The bottom line is: The more prepared you are for leadership succession down the road, the more prepared you are for taking your business to the next level in the near term.
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