Introduction
When considering succession planning for your business, it is essential to understand why most succession plans fail.
Manchester United is one of the most valued football clubs in the world. The club has been dealing with multiple issues since the departure of its most successful manager, Sir Alex Ferguson. This is a prime example of why succession planning should be a long-term project.
Succession planning is challenging. You’re working to identify the right person, train and groom them and then get them in place before you retire. The problem is that there are times when people can’t be trained or groomed for the position; sometimes, it’s because of a personality clash or an inability to share power; other times, it’s an honest disagreement about strategy. Succession planning fails because we don’t account for all the scenarios that can lead to failure. While we can list several common reasons why succession plans fail, this book outlines some of the more common ones and focuses on how you can overcome them.
The following are common reasons why founders and business leaders do not have adequate strategies:
First, most transition plans fail because they need to be more proactive.
Most founders and business leaders need a written plan and those that do often need to be more specific or complete. A well-written succession plan will help you be more proactive and organised, increasing your efficiency as a business owner. You can also use the program to help find new staff members.
Most transition plans fail because they need a written plan.
Most transition plans fail because they need a written plan. So why is it essential to have a written plan? A written plan ensures that everyone understands how the company will be run, what role they play in making that happen and how long they need to be prepared for the change. It also lets you see where there are gaps in your succession well before anyone is ready to step into their new role. The best way to write your transition plan is by answering three key questions:
What does “succession planning” mean for your business? What does it mean if you don’t have someone to replace you quickly? How can we ensure our employees are ready when we are no longer here?
Most transition plans fail because they need to be more specific, measurable and focused on goals.
To ensure that your succession plan is as effective as possible, it is essential to keep the following points in mind:
- Make sure that you are specific. In other words, identify precisely what needs to be achieved and when. This will help you create a clear picture for yourself and others about what needs to be done.
- Be measurable to rank how well the transition has been executed (and where there are opportunities for improvement).
- Set goals that are achievable. It’s better if there is a lot of flexibility in the process rather than trying to stick rigidly with a plan that doesn’t work out because it needs to be more realistic and time-bound.
Most transition plans fail due to poor communication.
Poor communication is one of the biggest reasons that succession planning fails.
Poor communication can lead to confusion, resentment and a lack of morale. It can also lead to poor productivity, quality and customer service.
It’s essential for everyone involved in the transition process to know what their role is and understand how it fits into the whole picture. In addition, communication must be clear from beginning to end, so no one feels left out or confused about what’s happening around them and why certain decisions have been made about their position on staff at work.
Most transition plans fail because they only consider exit alternatives other than selling the business or transferring it to family members.
There have been some famous succession planning sagas from the GUCCI feud, Viacom Saga, McCain Foods brothers saga, Reliance Industries India issue and Sir Alex Ferguson succession issue at Manchester United.
- Consider other options. It may be impossible to keep a business in the family, but alternatives always exist. A transition plan should include an exit strategy that considers non-family options such as merger or acquisition, selling the business individually, keeping it in the family and finding outside investors or joint ventures.
- Protect your company’s assets from taxes with proper estate planning. If you need an estate planner who understands your peculiar business sector, you could pay unnecessary taxes when transferring your ownership stake to others. Additionally, without proper planning for this transition period, family members could inherit property that wasn’t adequately titled or documented—resulting in legal issues if the new owners try to sell it back out of their name again.
- Consider all your investments and assets as part of your exit and retirement strategy.
- Review insurance policies and ensure they’re still relevant for today’s world—especially regarding succession plans.
- Ensure all employees know what happens if they quit/are fired while working at one company before moving on to another (e-mail them copies).
Many founders and business leaders will exit their businesses in the next few years, which is essential.
This is an important issue. Exit or retirement is a big deal, and it’s getting bigger daily. The average retirement age and the number of founders and business leaders exiting in the next few years are increasing. Founders and business leaders must plan for their exit from the business.
Beyond the reasons listed above, there are more reasons that I cover when I speak at events.
Bottom-Line
It’s becoming increasingly common for founders and business leaders to plan for their exit from the business. Businesses are a vital part of every economy; their success helps drive job creation and economic growth in communities across the country. The good news is that businesses can ensure they have the right plan when they prepare to pass their legacy on to future generations.
Succession planning is one of the pillars of my proprietary framework, The 5 Pillars of Business Growth. I will be happy to speak more about this or share some insights as a consultant.
Who am I?
I am Dotun Adeoye, a Business Growth Strategist & Author of the 5 Pillars of Business Growth.
I’ve built up my experience via serial entrepreneurship, consulting leadership roles in business growth, business development and product innovation in large companies worldwide in the last 29 years.
Today, I consult with large businesses on how to sustainably grow their businesses, sustain infinite growth, ensure business continuity and achieve a legacy.
Hire Dotun Adeoye to Speak Virtually or In – Person at your company’s event to cover this or other topics. You can also get in touch via +44 203 097 1718 or dotun at dotunadeoye.com.
