6 Key Questions to Ask Yourself When Succession Planning
Many business owners are blinded by the illusion that, “If my business is successful now, it always will be.” When business owners allow this illusion to cloud their judgment they are only hurting themselves in the long run. Although your business may be thriving presently, have you considered the future? What about retirement age? Potential competition outperforming you? Technological advancements surpassing your capabilities? This is why it is important to start succession planning now.
The Beringer Group is dedicated to ensuring you and your business are prepared for any challenges that come your way. Allow us to support you throughout your succession planning journey by guiding you through the following questions:
What are my company goals?
The first step for a successful succession planning process is considering your company’s goals and the people you need to achieve those goals. Creating a comprehensive one-to-five-year business plan that addresses your organization's goals will be beneficial when trying to determine your next steps as a business. For example, if your goal is to grow your business by adding a new location, you need to create a step-by-step plan that addresses how you will achieve this goal. It is pointless to set goals without a course of action in place.
What is my exit strategy? Do I have successors? Interested buyers?
There are several ways to exit your business. One way is by being acquired by or merging with another company. Being acquired or merging with another business can be a profitable exit strategy for businesses and entrepreneurs. The Beringer Group has helped hundreds of clients find suitable buyers with our free business valuation.
Another way to exit is by passing on the business to a family member. Although this sounds straightforward, it can get quite complicated. This exit strategy, however, is a great way to put your next generation in a prominent starting position, as well as possibly providing many tax breaks for your company through the estate planning process that may take place for the company to be passed along.
Do any potential successors align with the company’s values and vision? Weaknesses?
Although passing the business to your next in line seems like an easy option, it might be worth it to consider other successors. Evaluating potential candidates is a great way to see if they uphold your company’s values. In addition, you can assess their strengths and weaknesses to decide if they would make a good fit. Maybe there is someone on your management team who has potential, and you can look into training them early. The earlier you start preparing them for the role the smoother and easier the transition will be.
You might find that hiring someone externally is a better option. A lot of business owners dismiss outside hires because they assume they do not know enough about the business to offer useful advice. External hires look at the business through a fresh set of eyes. They contribute a different perspective that you and other team members might have never considered. No matter who you decide to hire, make sure to assess all options thoroughly. You do not want your company to get off on the wrong foot because you didn't research all your potential successors.
What skills and knowledge are required to keep the company running smoothly? How can I ensure a smooth transition of leadership?
If you or another essential employee decides to leave the company, is there a certain skill set or industry knowledge you would be taking with you? If you do not plan ahead you will be leaving your successors in the dark. This is why it is necessary to assess where your company’s knowledge lives. Having a centralized location to store company information would be extremely beneficial when it comes time to part ways with the business. This way the right people have easy access to up-to-date information.
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For instance, let’s say Dan is the CFO of a successful HVAC company, but it comes time for Dan to retire. Once the CFO position is filled, the new recruit cannot find any data on the company prior to their arrival so they have nothing to base their decisions on. If Dan had stored the company information in one centralized location, the new CFO would not have to waste time asking for help, allowing them to spend more time making educated decisions.
How will the succession plan impact key stakeholders, such as employees, clients, and shareholders?
Considering how your succession plan will affect key stakeholders is essential to creating a smooth process. In one way or another, your employees, clients, and shareholders have all helped the company reach success. Failing to consult them will result in a faulty plan. An effective succession plan incorporates all members of your business and gives each member the opportunity to share their opinion. This will create a cohesive and transparent plan everyone can stand behind.
Now that you understand the basics you are probably asking yourself the most important question…
How do I start?
Succession planning is a complex process, which is why it is a good idea to contact a professional and have them guide you through the process. Hiring a professional allows you to make well-informed decisions about the future of your business. If you are looking for an expert to accompany you on your succession planning journey, contact The Beringer Group. The Beringer Group specializes in succession planning and has helped countless companies make tough decisions. Contact us today and start planning your business's future before it’s too late.
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