No matter the size of your business, some key people ensure its smooth running and growth. Without these people, even successful companies can face difficulties. Creating a business succession plan is an essential step for business owners, explains Alastair Shaw, Independent Financial Adviser, Independent Financial Adviser at Pembroke Financial Services.
Alastair said: “A succession plan is a strategy for developing future leaders within a company. It can help identify the people that will step into key roles in the future. It can mean that should an employee leave, you have someone ready to take over that you can have confidence in. Business succession planning can also provide security in other instances too, for example, if a key employee becomes ill or the business needs to expand quickly. In many cases, as a business owner, you should also be part of the succession plan, paving the way for you to step aside when you’re ready.”
With a succession plan, being proactive is essential. When someone is ready to leave, it’s too late to start the process. Being proactive means you can reduce the potential negative impact it could have on business operations.
If you’ve yet to put a succession plan in place, here are five steps you should take to get started.
1. Set out the business’s vision and growth plans
It’s impossible to create a succession plan that accurately reflects your business without first spending some time looking at what you want to achieve. What are your business’s core aims and goals? How do you see the company changing and growing in the next ten years?
With a business plan set out, you can ensure succession planning aligns with your business’s needs.
2. Take note of existing skillsets within the business
“Once you have an overview of your business and how you want it to move forward, it’s time to assess how your business operates now. You should look at the employees currently in place and identify the skill sets they bring. Are there any gaps in your workforce? Which skills are essential to the running of your business? And are you positioned for the future?” Alastair continued.
While hard skills are often the focus when reviewing your workforce, don’t forget about the other insights team members can bring. Someone that has worked closely with clients for several years could have valuable experience and strong working relationships that are just as important as technical skills.
Don’t forget to include yourself either. While you may have no plans to leave the business yet, taking steps to ensure it could run without you can provide a safety net and offer you more options later.
3. Speak to your employees about their goals
Speaking to employees can offer a wealth of information and help you better understand what they want to achieve. As part of wider performance reviews, asking what their professional goals are and the skills they’d like to develop can identify those keen to move up in the company. Employees may surprise when you ask where they see themselves in the future.
Alastair noted: “While some firms opt not to tell employees they’re being fast-tracked to leadership roles, it can be beneficial. It can mean they’re more engaged with the business and the additional responsibilities you want them to take on. It can also help you retain the employees that are part of your succession plan, providing stability.”
Just as important as nurturing talent within the business is recognising when you’d benefit from recruiting.
4. Set out a plan to develop skills and experience
Once you’ve selected potential candidates, a plan is essential. This should bring together the skills your identified were essential within the business and how you can support candidates to develop them. That may include in-house training, going on an external course or simply involving them in routine processes so they can learn while working.
Don’t just pass on the skills needed but give them a test run too. Whether you hand over the reins for certain projects or allow a leadership candidate to take charge while other employees are on holiday, it can give you confidence as well we motivating them.
5. Make evaluating your succession plan a regular task
Don’t put a succession plan in place and then forget about it.
“For it to be successful, it needs to be regularly reviewed and evaluated. You should ensure leadership prospects have regular appraisals to identify where skills and experience are needed, as well as couniting to look for promising talent among other workers,” Alastair added.
“You should also consider if your succession plan could be beneficial as part of your hiring strategy. Promoting the opportunities and support given to leadership prospects can help you secure promising talent and increase candidate numbers when advertising roles.”
When you’re planning the future of your business, it’s also important to consider your own future. When you step aside from your current role, what do you want to do? Whether you plan to set up a new business or retire, financial planning can help ensure you have the means to achieve your goals. Please contact us to discuss your financial situation and the steps you should be taking.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.