Creating a succession plan is extremely important and can provide many benefits to you and your business. Unfortunately, many business owners neglect to create a succession plan for when they leave their business until it’s crunch time — right before they choose to leave or (in unfortunate circumstances) are forced to leave.
It’s important to note that thorough succession plans can take several months to create, so the sooner you start the process, the better. Having a plan ready in case something unexpected happens can relieve a lot of stress because there’s no question about what needs to be done and who will take on the leadership role.
Having a plan in these situations is also helpful because uncertain leadership can result in struggles to adapt as a business, which could ultimately result in having to close.
Starting the succession planning process early allows you the time to consult with any professionals that you might need to — such as lawyers, brokers, and accountants — and gather all the important documentation that relates to your business. Having everything organized in advance can be appealing to future buyers of your business, as well as current investors in the business.
One of the steps in succession planning is to consider what you want for the future of your business — at the very least during the transition to a new owner, but ideally growth potential. Planning for the short-term future allows you to decide whether the potential buyer has similar goals and values to you, and whether you want to stay on as a mentor or make a clean-cut from the business.
These questions allow you to also create plans for your employees, ensuring that current and future staff will receive proper training and access to resources that they need.
Long-term future planning may seem like a pointless exercise, especially when you intend on leaving the business, but that’s not the case. Looking into the future of your business and where you hope to see it go can be a very meaningful experience — it gives you an opportunity to summarize the values, vision, and goals of your business, which can give yourself, employees, investors, and future buyers an anchoring point of what your business is and what it can do. Succession planning requires you to truly understand your business inside and out, which is a useful exercise even if you aren’t interested in leaving your business anytime soon.
Ultimately, succession plans have many upsides for everyone involved, but especially you and your business. The sooner you start planning, the better prepared everyone will be for the future and whatever it may hold.