There comes a time in every businessowner’s career when they write their final chapter and trust that the story of their business continues to be written in the capable hands of their successor.
Succession planning as a concept is easy enough to understand. But when the day comes to enact a succession plan, the reality is much more difficult.
Whether your retirement is in the near or distant future, it’s healthy to think about the future of your company. Here are a few tips that will help you prepare to have your retirement toes in the sand, confident that the company you built or inherited is in capable hands, thanks to your succession plan.
1. What to know: It’s emotional (and should be)
Those pesky emotions account for much more of your succession planning than you may think. Although you might be more than ready to begin crossing off items on your retirement bucket list, nobody is ever 100% emotionally prepared for the negotiating, nerves and uncertainty that the future holds (especially when you won’t be the one holding it).
When you pour so much of yourself into a business that you loved, it can be difficult to let go. And that’s OK — your business was your baby. Now is the time to trust your successor to nurture your business and make sure it thrives.
2. Identify and develop talent
Deciding who will fill your big shoes may seem obvious at times. Often, a company’s successor is naturally the next in line on the totem pole — the most seasoned employee or a family member, for example. But take pause. Not everyone is equipped to lead, no matter how hard you want them to.
Throw all current titles out the window. Look to the big thinkers and the big “doers.” Your successor must be the most passionate and capable to ensure future success and have the skills necessary to thrive in a higher position, like CEO or president.
Struggling to identify a successor? Consider working your must-have criteria into future hiring. The opportunity to hand-pick the leader of your legacy doesn’t come easy, but hiring the best talent ensures a bright future for your company.
Once you’ve identified a suitable replacement, encourage them to explore development opportunities. Sure, your big shoes may fit them, but they’re still going to be clunky at times. Mentorships and training seminars are great ways to strengthen any areas of weakness. Above all, trust the process. You chose this person for a reason. Although they may have a different leadership style than you, you share the same goals in obtaining longtime company growth and upholding a legacy.
3. Take action
Your succession plan, no matter how solid you feel it may be, will enter a negotiation period quite quickly.
From the second you gauge the interest in your pick for the new captain of your ship, negotiations will be underway. You don’t want a “yes” man or woman who’s willing to adhere verbatim to your plan from the onset. You’re talking about the future leader of your company, for Pete’s sake. Your successor should already have their own ideas on the future, which will likely involve ideas for improvement, some of which you may disagree with. This will be the first time your emotions will be tested. Have an open and honest discussion about your future leader’s vision for the company’s future — (gulp) without you.
4. Enact your succession
As a business owner, it goes without saying that strong legal representation will be advantageous (and necessary) for both parties as you navigate the intricacies and situational uniqueness involved in your transition. A successful transition is a multi-step process that involves everything from financial returns and tax issues to the final buy/sell agreement.
Selling a small business? Encourage your successor to explore the resources offered by the Small Business Administration, like the ability to connect with a mentor who has successfully transitioned their own business, or a counselor to help perform a financial health check to ensure readiness. IHMVCU also offers solutions for a variety of business goals, including business loans.
If you can, enact your succession plan early. Stepping away can be difficult, so take the Band-Aid approach. Removing yourself from the company allows your successor and, more importantly, your staff to familiarize themselves in a working world that doesn’t involve you. But remember: Communication is vital. Who’s in charge? Draw those lines and stand behind them. A sense of chaos or loss of control can be cancerous to any company, no matter the industry.
As your successor steps into his or her new role, make sure to offer your expertise and guidance if needed. More often than not, they’ll gladly accept this trusted advice from a seasoned pro. Then sit back and watch as your big shoes begin to form quite comfortably to the feet of your company’s new leader.
5. Walk away
When the ink has dried on the official documents and your company has been signed over, walk away confident knowing you gave your successor the right tools to lead the company into a new era. Then take off those big shoes you once thought impossible to fill and slip your toes into the sand. Enjoy retirement.