3 key steps to business succession planning
If you could not work for several months, could your business continue to run smoothly without you?
Research carried out by the Value Builder Score, involving 2,300 companies from around the world, shows that you’re almost twice as likely to get an offer to buy your business if it can survive the â€œhit-by-a-busâ€ test.
Even if you’re not planning to sell your business, a company which is not dependent on you is liberating and less stressful. It can also increase your productivity and profits.
Learn to let go
Some owner-managed businesses fall into the â€˜owner’s trap’ – where business slows when they are absent, customers rely heavily on them and their revenue may have reached a plateau.
It is important to learn to let go of some stuff. Letting go does not mean losing control. It means empowering others to take decisions and equipping them with the knowledge and support to do so.
1. Systemise – move away from Hub and Spoke control
A â€˜hub and spoke’ manager controls their business with decisions centralised at the hub. Such businesses can be stressful to run because you can never take a break and all decisions – even the most mundane – are brought to you.
Practical steps to reduce dependency include:
- Writing instructions or designing a process to minimise an owner’s personal involvement in certain tasks.
- Consider investing in technology which automates everyday processes.
- Put it to the test. Take a few days off to see where the business is most dependent on you personally.
- Stop giving your team the answers. Instead, ask â€˜What would you do if you were me?â€
2. Empower your team
A strong, incentivised management team will help maximise the value of the business. It is also more likely to attract financing to help fund a buyout deal.
Practical steps to take the bonus of decision-making away from you:
- Have clearly defined roles, with clear accountability and clarity of reporting lines.
- Invest in the talent within your business or recruit to fill key management roles.
- Allow team members to take on greater responsibility – perhaps let them run with a key business improvement project.
- If you don’t have a management team, hire a â€˜second-in-command’. They can help you balance the demands of running your company and advance your targeted exit time.
When you have processes people can follow, and you have your team in place capable of leading the business forwards, the key then is to ensure your people are highly engaged and incentivised to deliver. This means they truly take ownership and accountability.
Practical steps to motivate your team include:
- Provide regular feedback – both the good and not so good. Your employees will value knowing what’s working and what’s not.
- Don’t let personal appraisals slip through the net – these provide a key opportunity to agree objectives, review performance and discuss reward and progression.
- Provide training – continuous improvement in skills and capability allow your people to grow with the business. It also shows you care and are willing to invest in their future, which is great for staff retention.
- Create reward programmes, directly linked to achievement of targets and goals. Maybe consider a â€˜Long Term Incentive Plan’ in place for key managers. This can be a good way of holding on to the talent in your business – with an amount set aside into an accumulating annual account for each manager you want to retain.
Key steps of succession planning
Instead of micro-managing, set out your expectations and trust your team to deliver. Show support and guidance – more â€˜how can I support you?’, less â€˜do as you’re told’.
The key steps to succession planning are systemising, empowering and incentivising. This can mean a transition for the owner: from being a manager to being a coach.
Take our simple Value Builder Score and find out how ‘Scalable’ your business is. Whether your objective is to liberate your time, reinvest in a new venture or release family wealth, this survey can help you to accomplish it. It is free, confidential and will only take a few minutes of your time.
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