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Business succession planning identifies people who can assume key roles in a business during a transition. Planning ahead of time can help maintain business continuity in a situation like a sale, the abrupt retirement or death of an owner, or the loss of several employees in upper management. This can be part of an overall business plan and strategy to ensure a company is prepared for issues that may arise in the course of doing business. It can be a particular concern for small, family-owned companies that may not have a large infrastructure to support the business during a crisis.
One aspect of business succession planning involves providing current employees with adequate training and grooming some for possible advancement into positions of authority in the company. Employees on a management track can work closely with managers and other personnel to develop skills and thoroughly understand the business. As people higher up in the chain retire or move on to other positions, employees are ready to step in, take over their responsibilities, and keep the company on an even track. For positions in upper management, like chief officers, it is critical to have staff members ready and able to assume these roles in the event of a problem.
In a small business where there may be limited employees, the loss of an owner or key manager can destabilize the business. A carefully thought out succession plan can keep the business functional during a transition like the passage of a family business to the next generation. Owners can provide training and support to employees so they can learn about all the aspects of running the business, and this can create a framework for a smooth succession. Business succession planning can also include planning ahead for the handling of family disputes and other issues that could fracture a business.
Creation of an effective succession plan may start with identifying all the key roles in the business and defining them. Detailed job descriptions that are regularly updated are an important part of this process. This information can help planners identify the most likely candidates to take over these roles so they can be properly trained and informed. Business succession planning can encourage companies to take steps like entering a buy-sell agreement to retain an interest in a company during a transition. At the point of a trigger, which may include the decision by a key individual to retire, the business passes wholly into the hands of the new owner, who has been adequately prepared with training from the previous owner.
Continuity can be an important consideration for businesses large and small. Time and energy are needed to build up a business and attract clients. Business succession planning can allow a business to remain functional in transitions, preserving jobs, the reputation of the company, and its client base rather than forcing people to build a new company from scratch.