Effective Management Succession Planning Starts Here / by Kerri
Mortality is not my favorite subject either. But leaving a legacy in your business is a way to ensure immortality not possible anywhere else. An effective succession plan establishes the ground rules for what will happen when you are no longer around or no longer capable of managing the company’s affairs.
- To add value and make the business buyer attractive, consider appointing objective outsiders as members to your company’s Board of Directors independent of ownership.
- Establish regular strategic planning meetings that include successors and key employees whom you need to stay fully engaged in the company.
- Select and regularly communicate with a team of outside advisors, including lawyers, accountants, consultants, wealth advisors and tax advisors who have experience with privately held businesses, complex corporate matters and estate planning. These advisors can be a source of insight, continuity and strength as you prepare the business for succession or during an unexpected crisis.
- Be very honest with yourself when evaluating the strengths and weaknesses of candidates you consider as possible successors – internal or external. Try to separate issues of family, loyalty, longevity from issues of business acumen and strategic management.
- Start early to be prepared for the unexpected. Most closely held businesses experience a “sudden loss” of leadership due to death or disability because the owner never planned or prepared for their transition to reinvention; thus leaving behind children or spouses ill prepared to continue to manage the business effectively or sell it most profitably. What would be your plan for the “following Monday morning?” Who would run the company?
- Invest the time and money to train and educate the “next generation” of leadership for the company- whether the successor is your spouse, children or another family member or outside management hired in. If your succession plan calls for a full or partial sale of your business to some or all of your staff, do the same for the employees who will take over.