“The easiest way to enhance your company valuation and protect your business wealth is with succession planning.” — Phil Symchych
Welcome to this new version of Phil’s Profit Points® where I will share strategies, tactics, ideas, successes, and some failures, to help you grow your business and build your business wealth. If you want help implementing what you’re reading about, give me a call or reply to this email.
The Executive Summary
Succession planning for management is an ongoing process. You can’t start too soon. The six key steps are:
- Identify potential successors for key roles.
- Inform them they are potential successors.
- Update important documents so they guide successors in performing their duties.
- Educate successors to expand their skills.
- Expose successors to new business and growth experiences.
- Revise your succession plan based on how you observe your successors learning, growing, and performing.
Succession planning has a direct impact on your freedom, the valuation of your business, and keeping you in control of creating and protecting your business wealth.
To schedule a complimentary call with me about your succession planning status, go here. (Depending on when you read this, you may need to scroll to a different month on the Calendly scheduler page.)
For more succession planning tips, go to my website.
The Full Story
Let’s start your succession planning now…yes, right now. Now is good!
- If you or any leader could no longer work in your business, who would take over?
- Are these “second-in-commands” aware of their roles and prepared?
- Do you have a written succession plan to enhance your operations and protect your business wealth?
Congratulations! You’ve just spent more time thinking about succession planning today than 99.99% of business owners and leaders.
But let’s start at the beginning…
When our two girls were just learning to read, I showed them the back of my Hugo Boss necktie, read the letters out loud to them, “B O S S” and asked them what it spelled.
“Boss” they both replied proudly.
Then, after some strange and confused looks at each other, they said, “Dad, you can’t wear that, you’re not the boss in this house!”
That’s when I learned that, even at a young age, they were already bosses in training.
Early succession planning might be normal in some families, but it is far from normal in most organizations.
When I received my Institute of Corporate Directors training, they advised us that the board’s first priority is to hire the CEO, and the next priority is to hire the next CEO.
“CEO succession is always the top ongoing priority for a board of directors.”
~ Phil Symchych
Succession planning in private businesses, as I’ve shared before, begins in one of four places:
- At the kitchen table
- In the board room
- Hospital emergency room, or
- Funeral home.
The last two are not good places to begin a succession plan.
Being reactive in succession planning will significantly hurt your business operations. Waiting will hammer your valuation. Procrastinating will severely and negatively impact your business wealth.
So, what are you waiting for? If this was easy, and I know it is not, you would have done it by now. If you want help now, click here or reply to this email.
Other than the perception that succession planning is about death and taxes, what’s not to get excited about?
To clarify, estate planning is about death and taxes. More on this important topic in a future article.
Succession planning is about your ongoing business, and it has two main phases: management and ownership. Today, we will talk about succession planning for management.
Management succession planning is about:
- developing future leadership
- creating plans to operate and grow your business…with or without you
- strengthening the growth potential of your company, and
- protecting your business wealth and family’s financial future.
There are six key steps in succession planning.
Figure 1: Six steps to succession planning.
Identify key positions and potential successors for each position.
- Ensure the successors are aware of their roles.
- Create or update guiding documents for the key positions, such as job descriptions that are useful and make sense, standard operating procedures, and reporting relationships.
- Identify training and development opportunities that enhance leadership skills for successors.
- Expose successors to broader business and management experiences, so they can learn and grow before the pressure is on.
- Revise your overall plan based on how successors are responding to the training and experiences, to ensure you have the best people as successors.
You can’t start succession planning too early, as my wife knows, and our daughters have experienced.
By making succession planning a regular and ongoing part of your management team’s development, you will give them opportunities to learn and grow. You will evaluate their performance and potential in real time, instead of from a hospital bed.
As the leader/owner, you will be able to step back from the day to day and step up to higher level oversight and longer-term planning.
A few other tips for succession planning:
- Get a full medical physical exam to ensure you’re in peak health.
- Schedule your vacations in advance, ideally at least one or two weeks every quarter. Time away will help you assess the effectiveness of your management systems and the performance of your successors. It will also clear your head and recharge you.
- Turn all statutory long weekends into four-day weekends.
- Tell your customers, suppliers, and bankers that you have succession plans in place. This will increase their confidence and likely increase your business.
- Work with a succession planning expert who can give you a structure, develop a customized plan, and help you navigate the challenges of letting go.
One client had large customers who constantly pressured him to get a succession plan in place. He listened, and we worked together to develop and implement a plan that brought 15 employees into the ownership group and formalized their management roles. This created a management succession and ownership succession plan in one big event.
The customers approved of this succession plan and gave the company more business, a lot more business. The company grew from eight million dollars in annual revenues and 100 employees to more than fifty million dollars and more than 300 employees.
Succession planning can be a very profitable process in your life as a business leader and owner.
If you’d like my help to quarterback your succession planning process to protect and create more business wealth, decrease your stress, and leave a legacy, give me a call or reply to this email.
For more succession planning tips, go to my website.
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Thanks for reading. Thanks, also, for being an important leader in our global community of entrepreneurs.
Full speed ahead!