Starting and building a successful business requires hard work, dedication and extensive planning. But one business mistake owners often make is failing to create a proper succession plan.
What is a succession plan?
I’m Neil Fridman with the Fridman Law Firm. Today, I want to tell you three reasons why your business should have a proper succession plan in place. A succession plan is a comprehensive strategy that outlines how your business will operate on a day-to-day basis in case something happens to one or more members or partners.
These documents are meant to evolve as the business grows in order to address potential issues that may arise. As you might expect, the primary reason business owners put a succession plan in place is to protect the business from unexpected changes.
It protects your business
Whether you own your own business outright or have one or more partners or members, a succession plan protects your business’s future against unexpected events such as health-related issues, management changes, or a partner choosing to leave the business.
Often, the owners are caught flat-footed when emergencies happen without a proper succession plan in place. The business screeches to a halt, and it may take months or even years to recover. A succession plan is your business’s emergency plan, and if updated regularly, will always point you in the right direction.
It documents systems and processes
Succession plans are more than just contingency plans for the leadership. One of the most important things the succession plan will do for your business is document your company’s systems and processes.
Whether it’s due to the pandemic, a key employee retiring, or just a string of bad luck with hiring, you can only control so much when it comes to your team. A succession plan allows you to incorporate departing employees into the training of their replacements, and consistently document changes to systems and processes as they grow alongside your business.
This prevents your business from using unnecessary resources to train new employees and enables you to have documented records of each role and its responsibilities in your company.
Talent management and retention
The last benefit of a succession plan I want to discuss today is talent management and retention. Every business owner knows that good help is hard to find but when you find those diamond-in-the-rough employees, it is your responsibility as the business owner to make sure you retain them.
A comprehensive succession plan allows you to show key employees their potential career path by outlining the business’s goals and showing how their own trajectory within the company helps achieve those goals. Your succession plan can include future titles, salaries, bonus structures and more.
Keep in mind that the goal of a successful business is not to actively recruit new clients [[[shouldn’t it be “key employees”?]]] unless growth demands it. Instead, your goal as a business owner is to use a succession plan to pursue workforce continuity.