Creating a succession plan for your business isn’t quite as simple as choosing your successor and having them shadow you for a few days.
You need to consider many factors when developing a succession plan. It requires an in-depth analysis of your business’s past and future. You will need to reflect on the nature of your staff and customers, and the impending market changes that the company may face. Even if you aren’t planning on retiring for a few years yet, being prepared to hand over your business is essential. Furthermore, it’s a lengthy process that needs to be dealt with sensitively. You want to ensure that the company you have grown from the ground up will continue to succeed once you have left! Here are the top five things that you should be thinking about when choosing a successor, and creating a succession plan.
Your successor and staff may also expect incentives. Often you will discover the best person to succeed you by giving your staff reason to remain loyal to your company and encouraging them to thrive in their current roles. Happy employees who enjoy their work will want to continue growing the business once you are gone. Ensure that you are cultivating a positive working environment, giving feedback, offering praise where it is due and providing incentives in the form of better health care plans, training and company outings.
2. Assessing how your clients or customers will react to your retirement
Your retirement will affect not only your staff but also your customers or clients. When preparing your business for when you step down, you also need to be prepping your clients for this significant change. Briefing your clients is especially important if you offer a service. Your clients need to have met your successor and feel comfortable with him or her well before you’re out of the picture. You need to remain openly communicative to your client’s concerns, addressing each with sensitivity and proactiveness. Ensure that they feel heard and that they know you will do everything you can to leave them in the best hands possible.
3. Keeping a close eye on your competition
You should always be carefully following the actions of your competitors, whether you’re planning on retiring soon or not. However, if you are planning on sourcing a successor from outside of the company, keeping tabs on what your competitors are doing, and what they are offering, becomes critical. Keeping an eye on the competition stands even if your successor will come from within the business. You want to ensure that you’re providing a great opportunity, and don’t want anyone to be looking for greener pastures! If you don’t carry out your succession plan carefully and thoroughly, you could also risk losing disgruntled staff. They could even start their own business in direct competition to yours. The risk of losing important staff is why you need to review your business performance in correlation to your competitors, analyse what they are offering, and ensure that you’re staying ahead of the game.
4. Staying on top of technological advancements
It seems like every day a new program is developed to enhance systems, increase efficiency or improve workplace cultures. Technology is an integral part of every person’s job and life, and failing to keep up with these advancements will immediately place your business on the backburner. If your competitors can offer better goods or services to their customers and more efficient systems for their employees because they have embraced new technology that allows them to do so, your company going to fall behind quickly. Keep up with trends in technology, consistently assess better systems and gain a reputation as a forward-thinking, technologically competent business.
5. Evaluating performance
How do you measure performance? Do you listen to customer feedback and make changes accordingly to your services or products? Is there a product or service that hasn’t been selling well of late, and which trends suggest won’t survive future market shifts? It’s time to get into the nitty-gritty of how your business is performing, and where it’s heading. This type of assessment is not only integral to your business’s survival, but it will also be directly reflected in its value. That is, how much you will get when you sell it. A business valuation can be tricky and should be undertaken well before you plan on retiring as this will give you ample opportunity to make improvements to increase its worth (and set you up for a decent retirement!).
Do you require a professional, reliable accountant to carry out a business valuation, or assist in creating a succession plan for your company? Toohey Reid is Brisbane’s leading business accountants, committed to helping your company grow and prosper. Contact us today to inquire about our business valuation or succession planning services.
General Advice Disclaimer
General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.
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