Client William asks: I’ve built up a great business with blood, sweat and tears. Now I want to slow down a little. I don’t know if I should turn the business over to the kids or promote my best employee. How do I choose the best succession plan? I don’t want a family feud.
Coach Joel Answers: One of the hardest decisions of a small business owner is figuring out the best way for the company to continue to grow and prosper after you are out of the picture. You are right to be concerned. Here are some questions to help you make the best decision.
1. What is your vision?
William, what is your vision for the company? Where to you see it going? How do you see it getting there?
When thinking of the best leader, you want someone who buys into your vision. Or you need to be agreeable to someone else’s vision. Take some time to map out your plan and strategy.
Then discuss it with possible successors. What is their reaction? Who is most enthusiastic?
Far too often the second generation does not handle the company as well as the first. You can improve the odds with a clear vision and buy-in.
2. What is their interest?
As you look at family members, who is most interested? When you consider your employees, who has the most respect, ownership, or concern for the smooth running of the company?
Evaluate prospective successors based on their interest, involvement and commitment. Perhaps one family member shines in execution and another is excellent in sales and marketing. Which one is best for overall leadership?
It may be hard to be objective. Some may have a strong interest, but their skills are lacking.
However, if your successor is not fully committed to the future of the company, you will be disappointed.
3. Where is their skill level?
There’s a tendency to feel that no one can do as good a job as you can. And that might be true. But if you’re serious about planning for your succession, you need to evaluate the skill levels and train in the weak areas.
Sometimes there’s a benefit to bringing in a non-family mentor or manager to evaluate and train your successor. Family dynamics may make it hard to transfer needed skills and knowledge.
The neutral manager can take the emotions out of the training and ensure the correct skill sets are in place for your successor—whether family member or employee.
The coach, mentor, or manager will also be in a position to assess potential candidates in a way you cannot.
4. Are stock shares a good choice?
If you determine your children are not interested or qualified for your succession planning, how pass your assets on to them?
Consider issuing stock so they can own the company without having to run the company. You may determine if the stock will entitle them to a voice in the management or not. Of course you’ll base this decision on their interests and abilities.
When you asses and ask these questions, it makes planning for your successor a step-by-step process instead of an overwhelming burden.
William, there are many factors in determining succession planning for your small business. The most important thing is to start now. Write down your vision.
Evaluate possible successors. Starting immediately allows you time to train your replacement and ensure conflicts among possible successors are minimized.
Call to Action:
Let Joel help you assess your possible successors and establish the best candidate. Click here to connect with him.
