Succession planning details the steps required to move the business forward. Choosing team members and establishing their current and future positions provides a blueprint of advancement strategies and the order in which they must take place.
There are many approaches to creating business succession plans. Much depends on the industry and overall goals of the company. Most owners find it easier to work together with a business lawyer. Attorneys can prepare legal documents to pass along the business to heirs; create partnership agreements; or grant authority to others to conduct business transactions.
A large percentage of owners would rather promote employees from within in lieu of employing new staff members. This is a sensible approach as it provides the opportunity to train employees from the ground up.
One major advantage of putting together a succession plan is the company can continue operating in the event anything happens to senior executives. One example is if the owner were to encounter a medical problem that prohibited him from working the named successor could take control.
Business succession plans ought to also take into account personnel changes that will occur when key staff members retire. It doesn't matter if a company is established as a corporation or sole proprietor. It's imperative to designate a successor who can take over business operations when owners are ready to retire.
Developing succession plans will vary dependent on the unique circumstances of the company. Owners will need to decide if they will promote from within or hire outside the company, as well as establish roles for executive positions. They also need to determine who will inherit the company or take over at retirement.
The benefitsof preparing a succession plan are abundant. One of the most valuable is key personnel are identified early on and conditioned to fill their intended position when asked. Furthermore, employees fully understand their role within the company and given goals to help them advance.
It is a well known fact that staff members perform their job more efficiently when they knowingly have commitment from the company to advance them through the ranks. Employees typically put forth greater effort to ensure the company is successful when owners acknowledge and reward their endeavors.
To ensure plans are solid and effective necessitates advanced planning. This allows personnel time to become trained in their job functions and let owners figure out techniques needed to advance the company.
Lastly, succession plans ought to be incorporated in estate planning strategies to assure the company is protected in the event tragedy strikes the owner. Both estate and succession planning are especially important for family-owned businesses which are intended to be passed along to future generations.
As with most things in life there are advantages and disadvantages of succession planning. Always consult with a business law firm, such as Craton and Switzer, to find out which methods are best suited for your individual circumstances.