Succession planning is crucial to most SMEs and we explore why you need to do it from day 1
Succession planning – the how’s and why’s
SMEs come to speak to ourselves a lot about their succession plan. Obviously, it’s a key part of a person’s long term plan that they want to retire, or pass a business on to a family member, or even sell it at some point in time.
We feel the word succession plan in that process is a little bit narrow and a little bit too short termism. It doesn’t necessarily maximize on value if you’re just thinking about one person’s retirement once they reach a certain point in time. We feel a far better way is to look at a sustainability plan. So think about the longer term plan for the business. So not just about this person’s ultimate retirement plan, look at the whole business and think of the next generation there in terms of what will happen to them.
And if you give them an opportunity to see where their future will be, you’ll get far more buy-in and into the culture of the business, that there is a sustainability, that it’s not a short term business, it’s for the longer term and everybody’s got some benefits to be gained from working together, and looking to give everybody an opportunity to benefit from that increase in value and as time moves forward they can all take part in their succession. We think that’s a far better structure and culture for a business that we’re not looking at a dead end. It is looking at creating an underlying sort of opportunity for everybody to buy into that business and get something out of it that will lead to succession and that may be to family, to a sale, or just to continue the business trading, but it will be a far more dynamic business.
So really you need to start thinking about what the succession plan is from day one. The sooner you do it the better, because as long as you’ve got that culture in a business that looks for a strong leadership team, get really good people in your business, then you’ll have a very dynamic growing business that will allow various people to have a succession plan out of the business over a longer period of time.
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