When you hear the term “succession planning”, you might immediately think of a large corporation and how it grooms its top management executives for their roles in the future. Usually one or two people are theoretically “in line for the throne”, or to take the CEO’s job when he or she leaves the company.
But succession planning applies to small companies as well, and is perhaps even more critical there, because there may be many people who could possibly take over for a CEO but there are probably not many who could take over for the owner in a small business.
And in a small business, there are generally only a few employees, so that every single employee is critical to the proper functioning. If just one of those people was to suddenly leave for any reason, the entire business could be impacted.
If you wait until someone hands in their resignation letter or, worst case, falls seriously ill or dies, you have waited too long. Good succession planning starts early. You want to be prepared for anything to happen. This way, it is part of your personnel management process, and not a crisis management situation.
Consider roles, not personalities
You are filling a position, not replacing a person. You need to define each position’s roles and responsibilities, including any procedures that are necessary, so that another person can step in and get up to speed quickly. You will then be seeking out the best person to perform those responsibilities, not someone who is like the last person who held that position.
No one is indispensable
For every position in the company, there should be at least one other person who knows how to do the job and could help out in a pinch. If you have a particular position which only one person in the place knows how to do, then you need to get an additional person trained immediately.
Your business should be able to run without you
This includes every single position, even yours. If your business needs you every minute of the day, then you have not set up and delegated properly.
What if you were suddenly struck by a car and put into the hospital for a couple of weeks? Would your business fall apart, or would it continue to run smoothly?
At the time of writing this, my partner Sarah and I are in the United States for a 6-week business trip combined with vacation. If we were not supremely confident in our staff at Wealth Enhancers, we would never be able to manage such an extended stay away from home.
Plan for the unexpected
No one wants to think about dying, but we should acknowledge that there is a chance that it will happen unexpectedly. In the event that you should suddenly become incapacitated, you can make the transition for your family and employees far easier if you have made some preparations.
You need an up-to-date will with an executor named, a power of attorney and medical power-of-attorney, as well as a document that details your end-of-life wishes. You should also have life insurance, a business-succession plan, and an impartial financial adviser, who can step in and help out if relatives are overcome with grief.
Have documents that spell out exactly what should happen, and make sure that all pertinent people know where to find those documents. You should probably also discuss your wishes in advance with people, so that there will be no surprises and that potential conflict can be handled early.
If you prepare for any eventuality, then you know that you will have a plan in place no matter what happens, and that your business can go on without interruption.
Finn Kelly is the CEO and co-founder of award-winning Gen Y financial advisory firm, Wealth Enhancers, along with the parent company, premier private wealth management firm WE Private.