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Succession Planning And Its Importance To Business Owners

Jun 15, 2008
Small business entrepreneurs and businessmen work very hard to bring their ideas to life as a business. They toil to set up a business and work long hours to ensure that the business grows and remains profitable. But all that hard work can all be all for naught if they do not have a plan in place for their business when they retire or if they were to suddenly become sick or pass away.

According to the latest research of Bibby Financial Services, it was discovered that more than half (56 per cent) of entrepreneurs in the UK, instead of facing reality, would rather ignore or not pay much attention to the fact that they won't always be around to look after their business

Family businesses are usually the worst culprits for not having a firm succession plan in place. This apparent lack of an effective succession plan is the biggest growth barrier being faced by these companies.

A major reason many firms doe not have any succession plans in place is because over 38 per cent of business owners admit that their business will probably close down when they do stop working - an issue of significant concern for the UK economy as well as for thousands of employees working in small businesses. Others have mentioned that they are reluctant to relinquish control of their business to another person.

Succession planning is a very emotional issue among owners because it is also a moment when they have to face their own mortality - and it is not a very enjoyable experience. But the conscientious entrepreneur must always take a contingency succession plan as a necessary business decision that benefits a lot of people.

Following are some pointers that may help business owners and managers take the first important steps towards ensuring that they have a succession plan in place:

- Delegate responsibility in the workplace don't rely on one person too much. In business it is a bad idea to be over-dependent - be it an employee or a client.

- Always formulate a plan and start the planning process early so that you can assess all of the options and come to a decision that is best for your business.

- Consider your likely successors based on their individual merits and avoid appointing a person just because they "remind" you of yourself

- If you want the succession to be within your family then members of your family should be groomed for the eventual succession only if they possess the appropriate skills and talents needed for the job.

- If you are ready to start training your successor give them an on-the-job training programme that is not only relevant but will also allow them to achieve their potential

- If you have plans of retiring in the near future - set a date and make sure you follow it. This retirement date should be far enough in advance that you can train your successor and allow him and the rest of your employees to get ready for the transition.
About the Author
Stella Stevens is an expert in company formations and registration. Visit Dolphin Formations for more informaiton
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