The primary benefit of good succession planning for small businesses is that it facilitates a seamless transition. According to statistics, small businesses tend to have less than 500 employees.
Therefore, proper succession planning is crucial because it helps small businesses to retain their employees. Consequently, this reduces or prevents the disruption of business operations.
For family-owned small businesses, succession planning allows a continuous flow of income. This is because a small business owner can choose a successor to run the business instead of shutting it down.
However, succession plans aren’t always developed to cushion the business from retiring employees. They’re also designed to protect small businesses from sudden unforeseen changes such as death or sudden resignation.
What is Succession Planning?
Succession planning is a strategy most organizations use to ensure that no positions are left unoccupied at any given time. For it to be effective, the organization has to fill these positions with qualified candidates.
Significantly, preparedness is also a key factor in avoiding workflow disruptions. Succession planning is meant to fill vacancies resulting from loss of life, resignation, or retirement.
While succession planning has been around for a while, most businesses don’t achieve the expected outcome. Some fail because they adopt other organizations’ succession plans instead of designing their own.
On the other hand, succession planning for small businesses is less complex because less time is spent identifying potential successors. Thus, adopting a larger organization’s succession plan is impractical.
Do’s and Don’ts of Succession Planning
If you’re looking to implement practical and effective succession planning for your small business, here are some of the do’s and don’ts to pay attention including:
- Leadership development
- Identifying potential successors in advance
- Comms plans with stakeholders
- Not leaving everything to the last minute
- Get professional advice
- Don’t fear change
- KISS approach to the succession plan
Nurture Leadership Development Within The Business
Most succession plans are designed to fill leadership roles. Leadership development prepares employees to take on leadership roles through promotion or succession. Either way, it provides small businesses with a vast pool of ideal candidates to occupy vacant positions at any time.
Making leadership development part of a business’s culture simplifies succession planning and increases the chances of formulating an effective plan.
Identify Potential Successors In Advance
The main idea behind succession planning is to reduce disruptions to the business’s workflow. However, keep in mind that not all successions are anticipated. On the contrary, some occur unexpectedly. In such instances, poor succession planning can result in the interruption of business operations.
Therefore, small businesses need to identify a pool of successors in advance. The identification process should be free of bias. Additionally, small businesses should ensure that the identified potential successors have what it takes to fulfill the company’s objectives.
Seek Expert Advice
Succession planning involves more than identifying someone with a high potential for occupying a leadership role. It also entails planning the business’s finances, ensuring taxes are in order, and facilitating continued productivity. It can be demanding to run a small business while also making succession plans, which is why seeking expert advice is encouraged.
There’s no limit to the number of advisors a small business can consult. Therefore, some experts that can help with succession planning include lawyers, financial advisors, and accountants.
Communicate Plans With Stakeholders
For a succession plan to work, you should involve significant stakeholders like the employees and clients. This enhances seamlessness when the time for succession comes. Notifying stakeholders is essential because the succession plan affects them on some level.
For example, notifying employees enables them to understand how their roles might change in the future so they can be prepared.
Similarly, informing clients is said to help with client retention as it builds trust and loyalty. This, too, prevents disruption as it keeps the business from losing its clients, which facilitates continued business operations.
More importantly, organizational change is inevitable for both small and large businesses. Managing this change is often made easier through effective communication. Therefore, communicating succession plans to stakeholders is an effective way of helping them handle any imminent changes.
Do Not Wait Until The Last Minute
Waiting until the last minute for succession planning isn’t a good idea. As mentioned earlier, succession planning is meant for planned and unforeseen exits. That’s why it’s safer to prepare succession plans earlier in advance.
Unanticipated exits can affect a small business in numerous ways. For example, the business’s productivity may decline if the sudden exits involve more than one team member. Similarly, reduced productivity can cause a small business to lose its competitive edge in the market. Consequently, this affects its profitability.
On the other hand, having a ready succession plan reduces disruption to productivity and enhances a seamless transition. Additionally, succession planning entails more than selecting viable successors. Thus, early succession planning helps small businesses avoid high tax burdens and enhance employee retention.
Do Not Fear Making Changes
Change is inevitable. Additionally, early succession planning gives small businesses adequate time to confirm the viability of their potential candidates. Therefore, once a succession plan has been designed, it’s necessary to revisit it regularly.
For example, modifications may be made if a previously identified successor no longer feels like a good choice. Revisiting plans frequently and making the necessary corrections enhances the effectiveness of the succession plan. Remember, adjustments facilitate a smoother transition while minimizing disruptions.
Do Not Complicate The Succession Planning Process
As earlier stated, succession planning for small businesses is a simple process. For starters, there’s a smaller pool of employees to choose a potential successor than larger businesses.
Additionally, the culture of small businesses determines what to include on the list of competencies an ideal successor should possess. This consequently makes the process simpler. Remember that the less complex the process is, the easier it is to execute.
Proper succession planning is important to help small businesses transition smoothly when employees exit. While succession planning for small businesses is less complex, you can follow certainly do’s and don’ts to achieve effectiveness.
The do’s include nurturing leadership development, identifying potential successors in advance, seeking expert advice, and communicating plans with stakeholders. The don’ts involve waiting until the last minute, being afraid to make changes, and complicating the process.
Successful succession planning for small businesses requires making early plans, simplifying the process, involving experts in the planning, and communicating effectively.