You planted the seeds of your business many years ago. But before you prepare to move on to the next chapter of your life, you need to begin the process of preparing your business for the future. As a successful business owner, you know better than anyone how important it is to pick the right person for the right job – and that’s not a decision you should take lightly when selecting someone to take over at the helm of your business.
In this article, we’ll take a closer look at some of the roadblocks businesses face, as well as the steps you should take to create a comprehensive plan to help ensure the continued success of your business.
Common roadblocks faced by businesses
Not starting soon enough
When creating a great succession plan, one of the biggest roadblocks that some businesses face is they didn’t give themselves enough time or severely underestimated how long it would take. Although there is no cut-and-dried answer, on average, you should plan on an effective succession plan taking anywhere from 12 to 36 months from beginning to end.
Not putting it in writing
Simply verbalizing your succession plan to those involved is not enough. A written process, such as who will be taking on what, how important the aspects of the business may be affected, and the value of your company should be included here. You should never assume that information, such as business processes, is widely known, and this should all be included in your succession plan. The more details you can include during the process of putting everything on paper, the better.
Not having professional help
There may be several legal issues a company has to deal with during a succession process. The better prepared you are to handle these from the jump, the smoother the transition will be. If you’re not already working with a business attorney, the start of your succession process is the best time to find one, so they can be included in the process in its entirety. Don’t forget about the tax implications! When a business changes hands, there may be additional taxes that need to be paid, which will correlate with the value of your company. When this valuation process is done correctly, it will make figuring out how much is owed much easier.
Automatically choosing family as successors
77% of small businesses in this country are family owned, which can make succession plans a little more complicated. In fact, almost 75% of family-owned businesses fail to pass beyond the first generation of owners, with that number increasing to 85% by the second generation, and 95% fail beyond that. This can be attributed to several issues, including family conflicts, informal leadership roles, lack of communication, and more. Before making a family member a part of your succession plan, have a meeting with them to gauge their willingness and desire to be a part of the next chapter of your business.
Not having everyone on board
Nothing can derail a succession plan faster than people pushing back against it. While you’re not going to make everyone 100% happy, you can make compromises where possible to get people working in tandem with the plan. For example, you can identify more than one person to potentially take over a role and then come up with a list of criteria with other decision-makers, and narrow down selections that way.
5 steps for creating a succession plan
Every business is built differently, so, unfortunately, there isn’t a “one size fits all” solution for succession. However, there are general steps you can take to help ensure the process is as rewarding as possible for everyone involved. A succession plan isn’t a one-and-done process, and should be thought of as a living document that needs to evolve with your company.
1. Pinpoint challenges your business may face
This is a great starting point when you’re trying to identify the right moves for the future success of your business. Sit down and identify some of the challenges the landscaping industry may face over the next one to five years. Break this down into short-term issues, mid-term issues, and long-term issues. The more specific you can make this for your business, the better.
2. Identify roles that need to be replaced
There are critical roles essential to the success of your organization. In some cases, you know in advance that a role will need to be replaced, such as a retirement; and in other situations, it may be a surprise. Either way, it helps to have a plan in place to help replace them and avoid gaps in that role. Don’t forget to include backups in the event your first pick is unable to take over or leaves for another opportunity.
3. Target potential replacements
Once you know which roles you’ll need to replace, you can come up with a plan to find the best fit for the future. You may not even need to look far for replacements. There are several benefits when it comes to promoting from within, including improved company morale, lower costs associated with the hiring process, and more empowered employees.
4. Implement a career development plan
Once you’ve identified potential replacements for positions, come up with a plan to make the transition as straightforward as possible to implement. This should include the new person working alongside their counterpart and taking on more responsibility over time. Not only will this provide an employee with the opportunity to gain first-hand experience in the role, but it’ll help capture the knowledge needed to be effective in the role, so you don’t lose anything during the transition.
5. Create a transition timeline
Now that you have the pieces together, it’s time to come up with a plan to execute these changes in an organized way. Keep in mind that unexpected things can happen, and that’s why it’s important that you create a succession plan that can accommodate delays and unforeseen issues. If plans keep getting pushed out, it may cause people to seek opportunities elsewhere, putting you and your plan back at square one.
Blaine Bagley is senior vice president, consumer home improvement lending operations, EnerBank USA, where he manages a team of operations professionals, including customer service, collections, contractor services, customer relations, lending, operation services and human resources.
Previously, he was vice president and manager of loan operations, where his responsibilities included the lending and collections departments. Bagley has more than 25 years of banking and financial services experience. He joined EnerBank in 2005 after ten years as the group vice pesident and director of collections for American Investment Bank, NA, a nationally chartered bank, where he oversaw the operations of the auto and recreational loan portfolios.