With most small businesses in the US being , how important is succession planning to these enterprises? Is it relevant or necessary to them at all?
But just because a business is essentially mom-and-pop, it doesn’t stop it from creating a business policy or plan. A business may be small, but that shouldn’t stop entrepreneurs from running it professionally along the lines of big business. Because, if you keep thinking small, you stand the risk of always being that way.
So, in much the same way, even family-owned small businesses can benefit from succession planning. True, many may not find it comfortable to think of a time when they’re not going to be around, to consider the consequences of ageing, disease, and death.
Also, you may think that as you have always just wanted to sell out the business, you don’t really need to bother with who’s going to take over. But then, consider the fact that with baby boomers retiring at an accelerating rate, the number of small businesses being put up on sale is as we speak. So, selling your business may not be a breeze, and until you sell it, you need to tend to it.
Again, small business owners are often caught up with the daily running of the business and meeting profit targets and so on, but the fact that you have put in so much hard work and time into building your business actually strengths the case for creating a succession plan. After all, you don’t want your lifetime achievement to fizzle away the moment you’re gone, do you? So, plan you must for the following reasons:
Firstly, and this one applies especially if yours is a family-run business, a succession plan ensures there is no bad blood or discord in the family.
, it ensures that there are no legal complications.
, the fact that you have a succession plan in place indicates that you have a clear view of your business’ future. This brings some sort of a predictability or stability in your employees’ minds, rather than leave them guessing about what’s going to happen to the business once you’re not there on the scene.
But to enable a smooth transition, merely naming a successor won’t do and that is not what succession planning is about either.
Ideally, the process of succession planning takes at least five years, so that you can zero in on your successor, work with them and train them, and ensure that the transition is going to be hiccup-free.
Family-run businesses should take care that the choice of a successor is driven more by practical considerations rather than emotional thinking. For instance, it may be someone else in the family and not your first-born who has put in more time and effort in working in the business and understanding it. So, naturally he/she is a more deserving candidate than your child.
People, who are passionate about their companies, will see the point of succession planning. You don’t want to leave it direction-less, in a state of anarchy. You created it, and it’s up to you, and also your responsibility to decide its fate.