Even if you are years away from retirement planning, having a strategic succession plan is key to your company’s future success. It’s recommended that succession planning for a business begin 15 years prior to the retirement of its owner. However, not all succession plans are created in the company’s best interest, which can affect brand loyalty and customer retention down the road.
If you already have a succession plan in place or you’re avoiding the task of drafting one, consider these four questions to decide whether your plan is helping or hurting your business:
- Does the Succession Plan Meet Your Business’s Future Needs?
This is one of the most important questions to ask yourself when drafting a succession plan. Does your successor have the desired skills to meet growing demands in the industry and do his or her goals align with the company’s future targets?
When choosing a successor to lead your company after you retire, decide which option is more important:
a) The candidate mirrors your exact skills and management style
b) The candidate’s creative thinking and expertise in other fields are what your company needs to grow and succeed in the future?
- Does the Plan Identify an Interim Leader in The Event of an Emergency?
A succession plan must include an interim leader in the event of an unforeseen or temporary vacancy. If a current leader falls ill or leaves the company, having a documented contingency plan in place allows your team to take the necessary action steps to quickly fill in responsibilities and ensure the unplanned absence does not affect business operations.
- Does the Plan Involve the Entire Leadership Team?
Remember to keep your leadership team informed and involved in your succession planning. This not only avoids confusion in the event of an unexpected vacancy, but it also allows your leadership team to build trust and loyalty with your company, as they are playing an important part in planning its future.
- Does the Plan Formulate a Smooth Transition?
Preparing your successor now ensures a smoother transition later. This means you should prepare your successor on the technical, operational, and social side of your business years before you plan to retire. By preparing your successor early, you provide an opportunity for both your employees and clients to become familiar and better acquainted with your successor. This leads to a more gradual shift in leadership rather than an abrupt change that can lead to negative consequences.
Set your business up for continued success with the individualized support and guidance of an independent financial advisor. From effective cash management to strategic succession planning, the financial planning experts at Focus Financial will help address your company’s specific financial planning and investment needs with professional direction and experience. Find an independent financial advisor near you!