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What Business Owners Need to Know About Succession Planning

It can be overwhelming to ask someone to plan for the future, including what will happen after they’ve passed. While some people only have to get their personal affairs in order, business owners also need to think ahead about the future of their enterprise.

What is Succession Planning?

Succession planning is exactly what it sounds like — planning for the future of the business as leadership roles change. That specifically includes the development of current employees or other individuals to replace the owner or other leaders of the business. Having a succession plan in place is critical for companies of all sizes and sectors including for-profit and not-for-profit.

When beginning to prepare a succession plan, it’s crucial for business owners to follow the following steps:

1. Create a Plan Proactively

Succession planning means that plans must be in place before a transition happens. That means business owners must be proactive in their planning rather than scrambling at the last minute to find the right people. Additionally, by planning ahead, it gives business owners the time they need to find the right person or people and conduct interviews or other business background checks.

Key concepts for business owners to keep in mind when thinking about the right person or people to take over include the job responsibilities of the business owner on a daily, weekly, monthly, quarterly, and yearly basis. Additionally, if a business owner has a specific person in mind who is currently with the company, they need to consider what happens to that person’s current role if they were to move out of it.

2. Finding the Right Candidates

Many business owners begin looking within the company when they’re considering succession planning. On the other hand, some businesses are family-owned and have been around for generations, which would limit a current business owner’s ability to find someone new to take over the company if the current business owner plans on continuing to keep the business in the family.

There is no right or wrong answer when it comes to pinpointing the right candidate to take over the business. Business owners should consider the factors that are most important to them when it comes to the succession of the business and enlist help from others too (whether that be other business owners, current leadership within the company, or other industry leaders, for example).

Once a candidate or candidates have been identified and a business owner feels confident in their selection, they should have a meeting with the candidate or candidates to ensure that they are still interested in running the business. One of the worst scenarios for a business owner would be to go through this process only to learn that the candidate or candidates have decided they no longer want to be considered for the position.

3. Consider a Trial Run

If the candidate or candidates may be on the fence about whether to take over the business, invite them to shadow you for a day or week to see the responsibilities required and what a “day in the life” looks like. Sometimes, it’s hard for people to envision their future without seeing what could be their reality first-hand. By opening this opportunity to the candidate or candidates, it gives them the chance to ask questions they may not have thought about before when it comes to business operations.

4. Integrate the Succession Plan Into Your Hiring Strategy

It’s important for potential new hires to know if the business owner may be transitioning. Most potential new employees will appreciate the notice about this and possibly ask follow-up questions about the new business owner or owners. It’s key to remain open and honest during these conversations as it builds trust with the potential employee.

Get Help with Business Succession Planning

Business owners should not have to do succession planning on their own. See how the experienced team at Chipman Mazzucco Emerson LLC has helped other business owners with their succession planning needs.