Management & Leadership: Success in Succession Takes Planning and Execution
Succession is tricky. Most business owners are too busy fighting the fires of the day to invest the time or energy in succession planning.
But if you were hit by the proverbial truck tonight, who would replace you? If your response starts with, "I thinkâ€ or, "I hopeâ€, it’s time to get serious about succession planning, because as one wise man said, "hope is not a very good strategy."
If you have a plan, does that plan specify a date when you will turn over the business to those who helped you develop that plan and are waiting their turn to execute? If your response starts with "whenâ€ that means you don’t have a date and your plan requires that you live forever and perpetuate the business well into the next millennium. Congratulations! You must have discovered the fountain of youth!
Let’s be serious. Every business and business owner needs and deserves a succession plan. Most successful, perpetuating businesses have one and this plan has contributed to their success. I would argue that a business’s long term success may be attributed in part to its ability to plan for the future and develop a strategy to successfully handle what the future business environment throws at it.
Let’s examine the needs of the business, the owner, and plan execution:
The long term success of any business is depends on its ability to provide a sustainable level of profitability in order to maintain and grow its stake in its market. Businesses need to provide a fair return to their owners and other stakeholders. These stakeholders may be customers, employees, vendors or anyone who depends on what that company produces. The company that is to be able to provide for its stakeholders is the company that will be able to succeed in the future.
Many of us are not replaceable. Just ask us. But let’s think about that. Not being "replaceableâ€ creates a lot of pressure and most business owners fear what would happen if they weren’t here tomorrow. However, they do nothing about it. A good succession plan addresses this and provides an executable plan should something happen to the owner. That is a comforting thought for the business and the stakeholders.
Once you have a plan, can you just file it under "succession planningâ€ and get back to business? Not really. There are stakeholders that depend on the successful execution of this plan so be sure to take time every year to review it. Also, make sure that the timelines continue to make sense and that nothing has changed since the plan was last reviewed. Make sure your plan is flexible, as things change and your plan will need to also.
Let’s be honest with ourselves. Succession plans are developed to address the future perpetuation of a business, but most business owners develop the plan for when they are no longer "around,â€ signifying something dire has happened and a plan needs to swing into action. In reality, it doesn’t have to be that way. Business owners deserve to retire and conversely most successors deserve to have their shot at running the business. Unfortunately, most business owners stay on too long and most good successors leave before they have their chance.
There is hope if you plan successfully. If you have a plan, that is great. Take it out and review it with all of the stakeholders you have identified and provide them with an update. If you don’t have a plan, or have started one but haven’t finished it, take the next step. There are many great resources in Northeast WI to help you create a succession plan that is both well thought out and executable.
If you are confused or need help, I recommend visiting the Wisconsin Family Business Forum for resources at http://wfbf.uwosh.edu.
Michael E. (Mickey) Noone is President Northeast Region, First Business Bank, headquartered in Appleton