Life does not always go to plan, so even if you have no intention of ever handing over the reins of your business, illness or injury might force you to do so. Having someone ready to run the company on your behalf will ensure that life goes on without you.
Few, if any, business owners are irreplaceable, yet stepping into someone’s shoes takes time. However horizontal your company structure, you probably have bits of knowledge and control that you have not shared. They might be things that seem insignificant to you yet could present considerable difficulties to someone asked to step in without adequate preparation.
What are the critical issues in a succession plan?
Knowing who will replace you to make the speech at the annual company dinner is not essential to decide now. Authorizing someone to access the bank account is. Here are some things to consider:
- Who will take over from me? You may give all the responsibilities to one person, or you may delegate them to multiple people. The crucial thing is to make your wishes are clear to avoid infighting.
- When will they take over from me? Let’s say you aim to retire at 60. You can plan for that, yet you also need someone who can step in sooner if circumstances require it. For example, you can prepare your daughter to take over when she finishes her studies. Yet, you must include provisions if an emergency arises and you need someone to step up in the interim.
An effective business succession plan will ensure that you continue to receive an income, your staff continues to get a salary and your customers continue to meet their needs. Having help to put the correct legal mechanisms in place will be crucial for your company to put the plan into practice if required.