If you’ve wondered how to get succession planning done in your business, we can help! Take a look at our 6 steps and get started.
This article is published by Modoras Accounting (QLD) Pty Ltd V11022019
6 Steps to Getting Succession Planning Done
If you’ve been thinking about succession planning, you’ve come to the right place.
Succession Planning is a process of pre-empting leadership, management or staffing changes in your business and putting strategies in place to ensure a seamless transition when these events occur.
It’s most often considered for leadership or management roles when a business owner is retiring; however, succession planning can extend to general roles in the business that are pivotal in meeting key internal and external deliverables.
Leaders or employees move on from their roles in business every day. Some departures are unexpected, and some can be planned for. Succession planning considers the effect of key people leaving your organisation and identifies solutions and processes to minimise impact on your business.
As well as being a useful tool in ensuring the longevity of your business, the process of succession planning also provides you with an important opportunity to view your business, its employees, and internal processes from a critical and objective angle.
Succession Planning should be included as part of an overall risk management strategy for your business.
If you’ve been thinking about succession planning, here are 6 steps to guide you on how to get it done for your business.
1. Take an objective look at your business
This is where you may need to take off the rose-coloured glasses and view your business in an objective way. It’s important that you get this part right as it will form the basis of your plan.
Review Key Roles
Figure out the tangible skills and qualities it takes to be at the helm of your organisation or in certain key positions, because this is the person you’re going to be looking for when your succession plan needs to be acted on. This may also give you the opportunity to identify future successors for specific roles.
Consider Current Processes
Take a look at the critical processes in your business. What will it take to ensure these processes can still be followed in the event of staffing changes? You should also consider whether these processes are documented. Critical business processes are all too often only known by the person who is responsible for a particular task. This can prove risky for business continuity if that person was to leave the organisation.
2. Consider the legal and financial implications of succession decisions
Succession may be affected by legal and financial requirements and outcomes. It’s important to consider these in advance to assist with decision-making.
- Selling your business to a successor
- Choosing to retain a financial interest in your business
- Taxation implications of selling or giving away your business
- Change of business ownership
- Death and inheritances
It is best to obtain qualified taxation advice to ensure appropriate decisions are made and any obligations are upheld.
3. Seek help to develop a strategy that works
Depending on the size of your business, a succession plan can vary in complexity. But it’s prudent to seek advice from a professional advisor experienced in business strategy and succession planning. They can identify issues and solutions you may not have considered. The insight from a person like this will be imperative to the effectiveness of your succession plan, and ongoing success of your business.
Tempting as it may seem, this is not the time to fill out a template to ‘tick a box’. There are very real considerations that need to be managed.
4. Document your strategy and processes
Whether it’s your existing internal procedures or the ones you uncover as part of this succession planning process, documenting your processes helps to ensure a seamless transition no matter the changes that occur in your business. Even the ones that don’t relate to succession planning.
By documenting the processes, you also give yourself a chance to review and improve if required.
You may also want to consider:
- Naming key personnel for particular succession pathways (if this is known)
- Employee training that is required for upskilling to enable them to be ready to step up
- Documenting recruitment processes to ensure any hiring meets required skillsets
5. Conduct testing to ensure your plan works
When big events occur in your business, they also come with added pressure. And this is not the time to test the succession strategies you’ve developed. Prior testing of your plan allows you to make any required changes so there are no nasty surprises when it comes time for implementation.
On the face of it, testing will take time in your business. But the opportunity to reassess and restructure during a controlled test, is much easier than during a time of upheaval in your business.
6. Review Your Succession Plan at Regular Intervals
Your succession plan is not set in stone. Review it regularly. And by all means, if circumstances have changed in your business, update the plan to reflect the new arrangements. This includes if your personal goals or plans for the business have changed as well.
What’s the risks of not having a Succession Plan
Don’t let your business success be lost for the sake of some prior planning. Without having a robust plan for succession, your business could be at risk of these things:
- Unable to meet customer expectations
- Leadership impasse
- Negative impact on profitability
- Making poor recruitment choices
- Decreased staff morale
All of these can lead to the biggest risk of all – your business failing. And you’ve worked too hard for that. Get started on your succession plan today.
Developing a succession plan for your business takes an objective and critical approach; two qualities our business advisors have in abundance. Contact us today on 1300 888 803, we’d love to help you protect the longevity of your business.
IMPORTANT INFORMATION: This blog has been prepared by Modoras Accounting (QLD) Pty. Ltd. ABN 81 601 145 215. The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individual's personal circumstances have been taken into consideration for the preparation of this material. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Accounting (QLD) Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Accounting (QLD) Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Accounting (QLD) Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Accounting (QLD) Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication. Liability limited by a scheme approved under Professional Standards Legislation.
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