What happens to you your business if you become disabled? Voluntarily retire? Have you set up a means of deriving the value of your business for yourself or your family members? If you have not addressed these issues, you need “Succession Planning” and now is the time to get started with it.
Whether you leave in a carefully orchestrated manner by slowly transitioning out of the office or you have a sudden medical event that leaves you immediately and indefinitely incapable of performing your job, you need a plan in place if you want the new generation of leadership to succeed when taking over your role.
Succession planning requires a time commitment on your part but will help protect the company that you run from disruptions and possibly insolvency in the future. What basic steps do you need to take to successfully plan for someone to take over your role via succession planning?
1. Talk to someone who has done it before
Business owners and executives can benefit from consulting with a lawyer when planning to arrange for new management or ownership at their company. You need to ensure the steps you take are valid and will not violate any laws.
Additionally, you may want to speak to someone you respect who retired from a company in the same industry as yours. They can give you tips about the strategies that worked best for them.
2. Identify your most important tasks
The next step in proper succession planning is essentially identifying your crucial job responsibilities. You likely perform many different responsibilities at the company, but some of them might be tasks that no one else can do. Those will be the ones you need to focus on the most when creating a comprehensive list of skills and experience someone needs to have and jobs they are able to perform.
Once you have outlined your functions at the company, you can then create a list of educational criteria or work experience requirements that will help ensure the person who takes over your position is capable of performing those tasks.
3. Proactively address any internal issues at the company
If you intend to retire in ten years or want to protect the company from hardship if your health declines, you need to prioritize tackling any projects that are key to the company’s success or value. You may also need to discuss future advancement opportunities with those who might be able to take over your role and begin training them now.
Investing your time in the creation of a succession plan as part of your estate planning process will help ensure the company you currently run will continue operating even after you make your exit from the organization.
