How to hand over your business successfully. Handing over a business is never an easy process, and there are many factors to consider. A succession plan is a vital part of any business plan. It would help if you considered who will take over, finance this succession and how a handover will impact the business.
Many business owners don’t consider a succession plan until they are about to retire. However, a succession plan should be in place in case of an accident, personal crisis or worldwide macroeconomic change, like a pandemic!
Only 30% of business owners have a succession plan. Build a safety net around your business with these simple tips on how to produce a succession plan.
Financing your succession
Everything in business comes down to money, and a handover is no different. Enhance your cash-flow with the Coronavirus Business Interruption Loan Scheme. Make sure your business can afford a change in leadership before launching a handover.
What is succession planning?
A succession plan should identify future leaders at your company and consider how they can be prepared for these high-level roles. A plan can prepare your business for all contingencies and prevent any detrimental issues after the handover.
Ensure you include a succession timeline, potential successors for every department, formalised standard operating procedures, business valuation and how you will fund a handover.
Key aspects to take into consideration
Before you begin detailing your succession plan, identify what’s important to you. Build a complex process of how your employees will operate the business without you and how this will impact your clients. You need to ensure that long-term clients are taken care of, and someone is responsible for maintaining these relationships.
Implement a mentoring program to train current employees in leadership skills. Your successor may not be the obvious choice. Often employees in lower positions are just as promising and may have the correct leadership skills. Employees in lower roles are, usually, more open to new opportunities to learn and upskill.
However, don’t just assume that everyone wants the job. Hold private meetings with potential successors to determine what they have planned for their professional future and whether your business is in that plan. It would help if you also made them aware that there are no guarantees and situations can change. Remember, your staff aren’t fixed assets either – they can change their plans as well.
Give your plan a trial run! Don’t wait until you’re retiring to test if someone is right for the role. Get a potential leader to fulfil some of your responsibilities while you’re on holiday. Trial runs let you know if they’re suitable for the position and it gives the employee a chance to test their leadership skills.
As well as preparing for your successor, consider who will fulfil other roles in your company—for example, HR, payroll, admin and various other positions.