Succession can be a difficult process if not planned ahead. Owners should plan for their retirement and succession at least five years before they plan to leave. This will allow them time to identify someone that will hold the company values and steer it towards greater success. More importantly, this gives the owner time to help the prospective successor be more of an owner and gain a long term perspective.
Family run businesses
If the business is run by a family, the owner should endeavour to involve his or her family in their decision and consult with them on the prospective successor. This will reduce tensions and conflicts between family members if they are kept in the loop and have a say in the matter. More importantly, you should develop a written succession plan to make the terms of succession clear and to solve practical issues quickly. This will help the process within a given time frame using a step by step process.
Choosing a successor and planning ahead
When choosing someone to take over for the business, pick someone who embodies your values and will be able to keep the company healthy and running for many years to come. A leadership plan will highlight how the successor should treat the different levels of staff and their problems. A structured development plan will also help identify what skills the successor may need to be more competent in for the role. It also highlights the vision of the company in the years to come, making the task of the successor a slightly easier one.
Gradual retirement or clean break?
Of course there’s a lot more to it than just choosing who will take the reigns once you’re gone. The owner must also decide whether they will still be in the company as an advisor or director or whether they want to leave the company entirely. The quicker this decision is reached, the better. As an advisor he may still be present to guide the next owner but if he were to leave the company entirely, they will need at least one to two years of training. In the years leading up to the retirement, they should endeavour to involve the successor in his decisions and make him known to important persons in the company.
Michael Davis, managing partner at chartered accountants, HW Fisher & Company
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