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After putting years of time, energy and sacrifice into building your small business from the ground up, the thought of passing down your business can feel overwhelming and make you hesitant to step away—even when the time may be right. However, having a viable succession plan is critical for small business owners looking to see their business flourish as they prepare to take on new ventures. Here are seven tips to make the process as smooth as possible.  

Family first: Succession planning doesn’t just affect your employees—it can have a big impact on your family, too. Filling them in on your plans to step away from the business keeps everyone at home on the same page. Doing so will also allow them to support your decision and encourage you throughout the process. 

Plan well ahead of time: Once your mind is made up, begin putting together a well-thought-out exit strategy. Start setting target dates—but be flexible because these may change—for when you want to announce your decision, when you plan to leave and when you want to name a successor. When it gets closer, it’s also a good idea to let most of your clients and customers know about the succession so they aren’t thrown off guard after the fact.

Prepare your team: You don’t want to throw your loyal group a curveball at the last minute. Letting your employees know well beforehand not only gets everyone prepared, but can also provide you with more valuable support as the days get closer to your succession. Communication throughout this process is key. 

Find the next person in line: Finding the right successor is the fundamental difference between your small business flourishing in your absence or failing. You’ll also need to ask yourself several questions, such as whether the best candidate is internal or external, who fits the company culture best and where you see the company in 10 years under their leadership. To get the ball rolling, it may be helpful to create a master list of candidates you have in mind and then slowly cross names off after giving it more thought.

Keep the “domino effect” in mind: If you choose to hire internally, it won’t be just your job that needs to be filled. You’ll need to also hire someone to step into that person’s job as well.

Grooming the successor: No matter how “ready-to-go” your successor may seem on paper, some type of firsthand experience or training is necessary before they hit the ground running. Taking the individual under your wing and showing them some of the key parts of your job—or even allowing them to take on a few or your duties before you leave—should make the transition go smoother during the beginning stages.

Decide how involved you’ll be moving forward: An important, but often overlooked, part of a succession plan is deciding whether or not you’ll remain involved with the business post-succession. Do you want to stay on as an advisor or become a board member? Make sure that’s carefully detailed in your plan as you move forward.    

And the Survey Says…

Surveys conducted by KPMG and Stanford Graduate School find the following:

  • 14 percent had a detailed succession plan. (KPMG)
  • 39 percent said zero candidates were “ready now” to immediately take over as CEO. (Stanford)
  • 55 percent said the succession plan is reviewed once per year. (Stanford)
  • 25 percent of organizations chose outside CEOs rather than insiders. (Stanford)

 

          

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