The Five Pillars of a Successful Succession Strategy

You’ve invested your time, talents, and best years into building your business, and it’s successful today because of your passion and hard work. But no one works forever, and your exit should be as carefully orchestrated as your initial business plan.

This is where business succession comes in. And the great thing about succession planning is that it not only provides a roadmap for your future exit, but it also strengthens your organisation in the here and now.

A successful succession strategy is comprehensive. It touches on every critical facet of your business, from legal and financial matters to leadership and stakeholders. It positions your company for success even after you’ve stepped away from it, and it also helps you to provide for your own retirement.

Let’s take a close look at the five pillars of a successful succession strategy.

 

Five Pillars of Successful Business Succession

A hasty exit can lead to uncertainty and a loss of momentum, but a well-organised business succession allows for a smooth transition and even increased opportunities for the company you’ve worked so long to build. A smooth succession includes the following components.

 

1. An Early Start

As mentioned above, a successful business succession strategy not only provides for your future, but it also improves your business right now, so the earlier you begin this process, the longer you’ll be able to benefit from it.

Your succession plan can help key stakeholders to understand how the business is structured and how assets are controlled and owned. With all of this information easily accessible, you’ll have more flexibility for ownership, allowing you to capitalise on opportunities for growth and expansion.

Another key reason to start your planning early is so you can develop leadership to take your place when you step away. With time on your side, you can mentor and teach your successor and train up other people who will be able to slide effortlessly into key positions when the time is right.

 

2. Collaboration with Stakeholders

The surest way to foment discord within your business is to privately create a succession plan and then announce it to the stakeholders. Your succession will impact many people, and the views of others are critical for making sure your project will succeed.

Start your succession strategy with a spirit of collaboration and seek the opinions and cooperation of all the key players. People are much more likely to support a plan they helped to create, especially when it will impact on their future careers.

Don’t forget to include your family in your succession planning. Your business has long impacted them, and your exit will affect them as well.

 

3. Carefully Chosen Successors

Business succession can be sensitive, especially for family businesses. As you consider your possible successors, evaluate each candidates strengths and weaknesses, and keep in mind that ownership and management are separate business succession issues. A carefully constructed strategy will consider both ownership and control.

 

4. A Well-Defined Strategy

The smoothest business successions are governed by distinct strategies, including explicit definitions of each person’s roles. For example, in some succession strategies, ownership is transferred to a new person, but the previous owner still maintains control over daily operations. Such an arrangement can work very well, but its success depends on well-defined roles and responsibilities.

When your goals for your business and personal retirement are spelt out, and everyone understands their roles and where they fit into the transition, a business succession is an exciting time of change and growth. There’s no reason the exit of a business owner has to lead to uncertainty and confusion. A well-defined strategy will provide clarity and opportunity for the future.

 

5. A Team of Experts

With the help from a team of experts, you’ll be able to create and implement a successful succession strategy. With all the financial, legal and regulatory issues involved, you’ll want to seek out the advice and expertise of professionals with experience in succession.

Our succession advisers can help you to cover all your bases and create a succession strategy that will allow you to achieve your goals. All of this takes time, so get started on your plan sooner than later. We can help. Reach out to us here.