{"id":84977,"date":"2025-03-19T07:00:00","date_gmt":"2025-03-19T12:00:00","guid":{"rendered":"https:\/\/www.success.com\/?p=84977"},"modified":"2025-03-18T23:57:38","modified_gmt":"2025-03-19T04:57:38","slug":"succession-planning","status":"publish","type":"post","link":"https:\/\/www.success.com\/succession-planning\/","title":{"rendered":"Strengthen Your Business With Strategic Succession Planning"},"content":{"rendered":"\n

Nearly two-thirds<\/a> of family-owned businesses don\u2019t have a succession plan, according to data from employee ownership platform Teamshares. Statistics like these represent a crack in the foundation of business ownership: owners\u2014and critical employees\u2014aren\u2019t ready to have someone take over their roles.<\/p>\n\n\n\n

\u201cOne of the biggest risks to the growth of privately held companies is owner dependency. As Peter Drucker once said, \u2018Entrepreneurial management in a new venture requires building a top management team long before the new venture actually needs one and long before it can actually afford one,\u2019\u201d says Laurie Barkman<\/a>, adjunct professor at Carnegie Mellon University Tepper School of Business. Barkman, fittingly, is also author of a handbook on business succession planning: The Business Transition Handbook: How to Avoid Succession Pitfalls and Create Valuable Exit Options<\/em><\/a>.<\/p>\n\n\n\n

Succession planning can feel overwhelming at first and understandably so. You might have never thought about handing over the reins to someone else to manage your corporate steed, but it\u2019s not as complicated as it sounds. We\u2019ll go over the basics of succession planning and the five steps every plan should include. Plus, we’ll give you some actionable templates to start the succession process yourself.<\/p>\n\n\n\n

What Is Succession Planning?<\/h2>\n\n\n\n

Succession planning is preparing a role\u2014and the person who will fill it\u2014to be transferred due to a key business leader retiring or leaving the company. This only applies with critical roles. These might include C-suite positions, vice-president roles, key managerial positions or the owner\/operator of a company. Succession planning is different from other types of strategic planning because it doesn\u2019t focus on a goal but on preparing for an event. It\u2019s a form of contingency planning.<\/p>\n\n\n\n

A successor plan is key to making sure your business has long-term success and continuity<\/a>. Without a plan to fill a vacant role with a properly trained person, you could be left scrambling if a critical employee leaves the business at an inopportune time. Filling the role quickly with someone that can scrape by doesn\u2019t solve the problems a vacant position creates, either. It could exacerbate them.<\/p>\n\n\n\n

Proper succession planning, instead, creates an environment where staff are expected to lean into more demanding and fulfilling roles with the proper training and oversight. It allows for insightful knowledge transfer to occur between senior employees and up-and-coming staff. This happens with the expectation that the knowledge will be used in the future. The undesirable alternative is that the information is forgotten when the senior employee retires.<\/p>\n\n\n\n\"SUCCESS<\/a>\n\n\n\n

The Succession Planning Process<\/h2>\n\n\n\n

The steps to succession planning can feel daunting, especially if you\u2019re a smaller, family-owned business. Thankfully, it can be broken down into five digestible steps: assessment, identification, development, creation and implementation.<\/p>\n\n\n\n

1.  Assessing Current Leadership Needs<\/h3>\n\n\n\n

Taking the right first step is critical to building a comprehensive succession plan. You\u2019ll need to begin assessing and evaluating your current leadership structure.<\/p>\n\n\n\n

Start by identifying gaps or areas for improvement for critical roles. Looking for a key way to determine whether a role is critical to your business\u2019 health? Start by assessing if the role is an essential support in carrying out the business\u2019 mission. For example, if you run a bookkeeping business with a mission to help fellow business owners track their expenses correctly and find savings, then the role of a senior bookkeeper is a key component to fulfilling your mission. Without them, you would lose the ability to service clients.<\/p>\n\n\n\n

Not sure where to start looking for leadership needs or potential risks? Begin by creating\u2014or reviewing\u2014your business organizational chart. Then, ask the following questions:\u00a0<\/p>\n\n\n\n