As a small business owner, what would happen at your company if you suddenly weren’t able to do your job? To find a solid answer to this question, you’ll need to complete a process called “succession planning”—that is, creating plans for new people to take over your business’ most important positions when the need arises.
Big corporations with hundreds of decision makers obviously have to think about this all the time, but if you’re a small business owner, you may be wondering “why is succession planning important for me?”
Succession planning is extremely valuable no matter how big your business is. In fact, if you only have a few employees, every one of them is probably vital to your success. Despite this, a mere 35 percent of all organizations have established a formal succession planning process. That’s a lot of risk to accept in an ever-changing, unpredictable world!
Fortunately, succession planning has benefits well beyond simply knowing how to fill a gap. Just going through the process can help you understand your business on an entirely different level. Read on for Janney’s in-depth guide to the reasons why your organization needs a succession plan ASAP.
What Will Succession Planning Do for Your Business?
A well-thought-out succession plan can strengthen your business in many ways beyond just replacing key employees in an emergency. Having the right plan in place will:
- Help you prepare for the future
- Make it easier to find motivated people in your organization
- Ensure your business will remain in good hands going forward
- Reveal issues with your current processes
All of these are important for achieving core objectives, and can help inform decisions about every aspect of your business.
Avoid Future Catastrophes
The wisest way to deal with the risks your small business faces is by planning for them. You have insurance to cover a host of accidents—so why not create a plan for dealing with succession too?
Remember: “why is succession planning important” is ultimately not a question about you and your comfort—it’s about the wellbeing of everyone in your company who is relying on continuity to manage their lives.
If your plan is sufficiently thorough, it will help them deal with anything from a severe illness that prevents you from continuing in your current position to losing key executives to a competitor.
Identify Promising Candidates Early
Succession planning often starts on the inside. You’ve surrounded yourself with great people, and that means there are already internal candidates who could excel in positions of leadership if the need arises. Talk to them, find out what their goals are, and see how they align with your vision.
By laying this foundation, you’ll let hard-working people in your organization know their efforts are appreciated (and that they could lead to a significant promotion at some point down the line). This process also serves as an excellent opportunity to check for vulnerabilities in your org chart. And if you don’t have any internal candidates who seem like a natural fit for your high-ranking positions, you can prioritize an external search.
Assist With Professional Development
Even with highly-qualified candidates in-house, there’s a good chance they’ll need to develop some skills before they’re truly ready for the leadership positions they’re under consideration for.
The good news is that starting your succession planning efforts early allows you to spot competency gaps before they become a problem. Your internal candidates can go through professional development or even return to school well before they’re formally asked to rise through the ranks.
Keep Your Processes Up to Date
Succession planning can also help you audit the way you structure your business. As you’re talking to candidates about potential roles and processes, you’ll be forced to really think about why your business does what it does. By taking time to consider the ins and outs of your company, you might spot procedural weaknesses and opportunities to improve your workflow.
Protect Your Business
How often have you heard about a major corporation welcoming an exciting new CEO—only to find them on their way out the door a few months later? Any change in a company’s leadership could affect its overall trajectory, and that isn’t just true for the Fortune 500. Even for small businesses like yours, finding leaders who fit your company culture is essential.
If you rely on external hiring for high-ranking positions, the candidates you find will be learning on the job, and that’s always a risk. That’s less of a concern with internal candidates, who have generally spent a considerable amount of time learning about these factors. A smart succession plan should help you understand exactly what you’re looking for before you need to know, as well as guide you to current employees who can help support a new hire.
Plan For the Long Haul
Succession planning is essential to your company’s broader efforts to plan for the future. A good succession plan can even help you determine potential opportunities for growth and the type of talent you’ll need in order to capitalize on these opportunities. For best results, you should develop your succession plan along with other parts of your growth strategy (including your financial plan).
Build Your Succession Plan with Janney
At this point, you’ve had a chance to ask yourself “why is succession planning important?”, and read up on the reasons why your company needs one of these plans. Now, it’s time to take the next step—creating a succession plan of your own. But like any other type of business plan, the process of preparing a succession plan can be time-consuming and stressful.
Our team at Janney cares about helping small business owners find both short-term and long-term success, and succession planning is an important part of what we can do for you. If you want professional help with your company’s succession planning process, set up a chat with our financial advisors.
