Well-managed businesses plan and budget, for sales, expenses, R&D, patent applications, cash flow and growth.
Unfortunately, a large number of businesses do not plan for succession.
There are many reasons why succession should not be ignored because it can affect financial arrangements and family relationships.
Unfortunately, just as night follows day, retirement and then death will occur to all business operators. After all the sweat and time that has gone into establishing a business, some consideration should be given to what will happen to that business when the current principal or key persons are no longer available.
The best time to start succession planning is at the very beginning of the life of the business and “What would happen if…?” is a good question from which to start.
What would happen if he/she was unable to perform his/her normal duties?
If this person is the CEO, who would take over as the top executive in the business?
Who knows the “secrets” of the business? Unfortunately, not all business arrangements are committed to writing and many are still based on a handshake.
Who knows the secret formulas, recipes or deals that have been done with suppliers?
How would the principal’s family survive?
Has any pre-planning been undertaken?
Has the principal written out a set of instructions on what should happen to the business if something should happen to him/her?
Has this list been lodged with the company solicitor?
Has there been any discussions with the leadership team on what the succession planning within the business is? With the key family members?
These is just a few of the many issues that confront an SME relating to succession. Like everything else in business, succession needs to be planned.