Whether you are a business owner planning to hand your business over to a family member(s) or an entrepreneur looking to sell your start-up, it’s presumed that owners and senior managers will move on at some point. You may wish to scale back your involvement in the business, retire entirely or progress to the next challenge. It’s likely that you have put a lot of time and energy into making your business a success, therefore it stands to reason that you would want to implement an effective succession plan to protect the legacy of your business and your reputation in the future. Succession planning goes hand in hand with procurement management as a means to safeguard the long-term stability of your business, even when you are no longer actively involved.
What is succession planning?
Succession planning usually focusses on key personnel and according to the Chartered Institute of Personnel and Development (CIPD) it “is the process of identifying and developing potential future leaders or senior managers, as well as individuals to fill other business-critical positions.” While identifying key personnel is essential, you should also consider the cultural fit of a new owner/manager and how any changes will be communicated. Thought should also be given to pinpointing any new trends within your specific industry as requirements may have changed since you started your business.
Identifying key roles
As a small business owner, it should be relatively easy to identify internal successors for key posts. It’s likely that you work closely with these people and are already aware of their strengths and weaknesses, and plan career paths and training programmes to provide the necessary range of experience should be straightforward.
For larger businesses, you may wish to develop a talent management programme which looks at the process of nurturing internal talent and investigates the skills balance needed when recruiting either internally or externally.
If you are intending to transfer your business to a family member(s), it’s recommended that you involve this person/people in the business as early as possible so that they can form a full understand of the way your business works and develop good working relationships with the people that they will be dealing with in the future.
Each business is different and it’s important that whoever you choose to succeed you is the right fit for your business. Whether you are transferring ownership within your family or selling your business it would be a shame if all your work to grow your business is stilted due to having the wrong managers/ new owners in place.
Phil Bayles, Chief Distribution Officer at Aviva explains:
“…you will need to look at the cultural fit of your new buyer, be confident that they will look after your clients and also your employees, particularly key members of staff that give value to business…”
It’s important that all staff are informed of any changes at the earliest convenience as rumours can be very distracting and detrimental to productivity. Effective communication to customers is also crucial to make sure that they are comfortable with any change of ownership or key personnel that they might deal with on a regular basis. This is particularly key if you are selling your business as the value of the customer base is likely to be one of your assets.
Whatever your individual situation, it’s important that you take the time to consider your exit strategy in advance to allow sufficient planning time. Coupled with this is the need to make sure that your purchase ledger is managed efficiently and your supply chain is established. Having contracts in place for all your essential services will give your successor the framework for a smooth handover and will help to ensure long-term success.
If you are interested in finding out more about succession planning, please get in touch with us on 03330 433233.