Succession Planning: Necessity For A Successful Business

For the success of your business after your departure

, you do not need to merely choose a successor but also determine what your business needs, to succeed after you are gone. As an entrepreneur, you may invest a lot of time in establishing your business but seldom do you spend time to think about how you will leave it. It takes an equal amount of time to create and execute a succession plan.

Entrepreneurs associate succession planning with choosing a successor. However, succession planning is not all about choosing a successor. You need to analyze what made your business successful: skills, knowledge or you. For sole-practitioners such as doctors and lawyers, the success of their business depends on them and it would be over once they leave. For this reason, they often bring in junior practitioners to take over once they are gone.

Other questions that you need to pose yourself are: existing and future market competition, necessary technology infrastructure, talent of current employees and management style. When you answer these questions, you will be able to determine the future of your business and how will it continue without you and who could lead it.

Personal financial planning also plays an important role in the succession plan, whether you intend to sell your business or transfer it to a family member or key employee. If you intend to sell and receive single lump-sum payment, you will need to have your investment strategies in place. You can seek advice from accounting and investment professionals to help minimize taxes on the sales. If you plan to transfer the business, your primary focus should be on long-term capital accumulation to suffice your living expenses and cover the income you received from your companys profits.

Naming a successor often causes rifts amongst employees and family members. However, if you want the success of your business to continue when your successor takes over, you need to discuss issues. Open communication plays a vital role in succession planning.

Succession planning can be difficult emotionally, financially and logically but it is important to secure the future of your business. You should start analyzing early so that you can deal with all the problems with ease.

by: Genny Brown

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