Succession planning can evoke all kinds of emotions in business owners and operators. However, for all business owners, the day will come when you will wake up in the morning and not come to work. For some the day is close, and for others it may be some time, but in all cases, there is significant value if you plan for the ongoing success of the organisation after the leader has transitioned. Danny Olsen, Partner in Business services at BDO in Perth, talks about the purpose of a succession plan, and how to ensure that the business can continue to operate successfully, ensuring the business leader transitions both gracefully and to a role that provides optimal challenge and enjoyment.
Leadership Development
“The first objective of a succession plan is to identify and develop future leaders”, Mr Olsen states. He continues, “Business leaders should seek several potential candidates who have leadership qualities, are committed to the organisation, and have the necessary skill set, values, and experience to step into the leadership role. Once potential leaders are identified, business leaders should seek to train and develop these leaders and prepare them for their future roles.”
Communication
Succession planning can be emotional, the leader can assist by communicating openly and transparently with all stakeholders. Mr Olsen highlights “the leader should be mindful of alleviating any concerns or uncertainty about the future of the business. A clear plan outlining the steps and timeline is helpful and can often be supplemented with a communication plan to assist the business leader to clarify their messaging.”
Continuity Planning
It is important to develop a continuity plan that ensures the business will transition smoothly. This includes documentation of key roles and responsibilities, risk management, contingency plans, and ensuring all the necessary systems and processes are in place. This plan will greatly assist in mitigating the risks that may eventuate during and after the transition.
Mr Olsen concludes “Succession planning is essential for any business that wishes to ensure the goodwill that it has developed survives the business leader. By focusing on the above areas as well as other key areas such as financial planning, legal considerations, tax planning, and transitioning the business owners you can ensure a smooth transition.” At BDO we recommend taking a proactive approach and seeking assistance from qualified advisers to ensure the long term success of your business.
For more information, or to speak to Danny and the team, click here
