Business Succession Explained

There seem to be many aspects to succession planning - ownership succession, management succession, and internal succession - and this can be quite daunting for business owners.

Explained simply, succession is best described as the transfer of both management and control within a business. It does not mean a complete exit from ownership - but it does mean an exit from management. It can be described more definitively as having three dimensions: ownership succession, management succession and internal succession.

Ownership succession focuses on who will own the business, and when and how that will happen. This is a platform for an owner's eventual transition from both management and, in many instances, from ownership. The ownership succession plan enables the business to be ‘groomed' attractively to ensure it is seen in the best possible light and gets the best price if you plan on selling.
Management succession focuses on who will run the business, what changes will occur, when they will be accountable for results and how results will be realised.
Internal succession is a disciplined means of nurturing, developing, and retaining talent as a platform for an owner's eventual transition from management and, in many instances, from ownership. A well executed internal succession planning process creates an environment which ensures that the best people have been chosen wisely and groomed appropriately to lead the business into the future.

How well prepared are you?

Test yourself simply by asking yourself these questions and if you can respond yes to all of them you are well prepared:

Do you have a strategy in place should you, or a key staff member, be unable to return to work for a long period, or never?
Is this strategy documented and has it been communicated effectively to the business?
Do you have a process in place that ensures qualified and appropriately trained people are able to take over competently when the current generation of managers and key people retire or move on?
Has this strategy been documented and communicated to the key people involved?
Do you have a ‘vision' for your business? Does it link easily to the ‘values' of the business and the behaviours of the people within the business?
Has your ‘vision' been well articulated and communicated with the people in the business?
Are you able to demonstrate your business plans for a clearly defined viable future?
Have these plans been clearly articulated, documented and communicated to the key people within your organisation?

Letting go easily and at the right time

If you are like countless business owners who have spent many years building the business to where it is today, not only knowing when the time is right to let go, but being able to let go easily is undeniably tough.

This is particularly so for those of you who have devoted your life, intellect, energy and identity to the business. However, being able to ‘let go' at the right time for you, whilst leaving the company in healthy shape, is the real testament to your strength of leadership.

Ideally, to make the wrench less painful personally and to leave a robust business behind, you need to ‘let go' from the word go. This means from day one choosing your people wisely, then having the confidence to delegate and engage them in all aspects of the business, nurturing them along the way, and rewarding them for their performance and their behaviours. It is not too late to start now.

Choosing and grooming the right successor

To do this confidently you need to have well considered recruitment strategies in place. This is critical because a poor succession choice can undo in months what you have painstakingly built over many years.

These strategies should form part of a plan to have the right leaders in the wings, groomed and prepared to take control and lead the business strongly into the future. This is also a sound risk management strategy for a situation when there is an unexpected emergency.

Bill Hovey, Linchpin Group. Bill Hovey, the author and CEO of the Linchpin Group Australia and Practice Executive Director of Linchpin Succession Management, has amassed more than ten years advising and counselling business in all aspects of business succession. Bill has built a strong reputation among his Australian clientele, assisting a broad range of clients spanning most industry sectors and business types and sizes, making him one of the most respected and sought after experts on the complex issue of business succession. For further information Ph: +61 2 94680 180 or visit the web sites: http://www.linchpingroupaustralia.com/ or http://www.successionmanagement.com.au/.
First published: 7 November 2007.
Last updated: 7 November 2007.