How to Identify a Successor
The challenge for many small businesses is choosing a qualified successor and deciding the appropriate event triggers to evoke a change of control. In the case of a family owned business it’s a tough decision, because who do you choose? Do you select a sibling, child, other relative, key employee, or a business associate? How will your decision impact the future and overall direction of the business?
A business owner needs to identify potential qualified successors. A great place to start is to look for people that have demonstrated an ability and passion for running the business. Selecting a person who is only half vested in driving the business will reflect in the future results via lack of performance. A key to finding the right person is to identify the necessary skills needed in a successor to drive the continued success of the business. Be inclusive in your thinking and open with possible candidates to avoid confusion and prevent disruption in the day-to-day operation of the business. There are many considerations to identify the right successor. The following highlight a few key considerations as you being your search.
- Focus on finding the right skills. Think about where you want the business to be in the years after you transfer control. What will make for a great leader, in terms of experience, leadership, business savvy, at the time the successor takes over? Make a list of the skills you seek.
- Establish a selection timeframe. Unforeseen events can occur at any time, so being ready can be the difference in your business’s survival. At a minimum you have a sense of when you might retirement, whether that’s in 2 years or 20 years from now, so use this as your starting point. However events can occur at any time, as indicated by the Social Security Administration which reports workers over 20 years old have a 30% chance of becoming incapacitated during their working years. Indicating that the timing is critical to initiate building a succession plan today.
- Find the right fit for the future role. Once you have a clear vision of what the new leader’s job description will be, it’s time to search. Be expansive in your search and consider all possible options. Undoubtedly you’ll have to groom the selected successor, so consider even developing one from scratch, if time allows. Where you feel comfortable seek advice and assistance from your existing advisors. They can be a good source of objective insights.
- Preparation and training from day one. Once you selected a successor immediately initiate their preparation. Communicate your decision and begin mentoring and challenges them to develop their skills to be ready to lead the company.
Using the services of a professional advisor can greatly improve your chances of establishing a sound succession plan tailored to reach your goals. Knowledgeable advisors can appropriately advise you on the succession planning process.
For more information or to schedule a complimentary consultation please contact BridgeLane Advisors, at firstname.lastname@example.org.