In previous articles, we have discussed basic steps for succession planning, best practices, and mistakes to avoid, among other topics. Various surveys have reported that an overwhelming majority of business leaders consider succession planning a critical or important priority, yet few believe that their organizations do it well. The overarching question to be asked, then, is “Why does succession planning matter?”
As a business owner ages, a question on the mind (perhaps, not vocalized) of employees, customers, and stakeholders involves the plan for the business after the owner decides they want to exit. While many owners proactively address strategic operational issues impacting their businesses, succession planning is often the proverbial can kicked down the road, to be addressed at a later time.
We get it; we understand that succession planning is hard. But ask yourself, is it really any more difficult that some of the other critical business decisions that you have made? Succession planning may make you uncomfortable. Perhaps you are not ready to think about your life without your business. Like it or not, however, it is inevitable. Therefore, treat succession planning as you would any other important strategic initiative.
Succession planning matters for several reasons, including:
- In a private company, typically a majority of the owner’s wealth is tied up in the business. Developing a plan for succession will help maximize that investment. Value is enhanced by having a business that can operate without the total involvement of the owner.
- Employees, customers, and other stakeholders want assurance that there is a thoughtful plan for the business. Others depend upon the successful transition of the business, and their interests are often aligned with the owner.
- The legacy that you have created is dependent upon developing the next generation of leaders. It’s important for the business to thrive and succeed without the owner making all of the decisions. Welcome and embrace new ideas and ways to do things.
- Recognizing that succession planning is an emotional process for the current leader, assessing the emotional readiness of the leader to exit and his or her ability to deal with detachment from running the business is critical. Thoughtful consideration of life after the business will enhance the likelihood of a successful transition.
Succession planning is about preparing an organization for the future. Consequently, let’s look to the horizon, rather focusing on the rear view mirror.
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