Your Business Without You: 4 Steps to Finding Your Successor
Apply now to be an Entrepreneur 360™ company. Let us tell the world your success story. Get Started »
When you’re in the throes of running and growing your business, it’s generally not a priority to think about who’s going to take over the reins when you can’t or don’t want to be at the helm anymore. After all, this is your business, who can take care of it better than you?
But New York City consultant John Beeson, founder of Beeson Consulting, Inc., which helps privately owned firms with succession planning and management issues, says you’d better put that succession plan in place now to ensure the long-term viability of all that hard work.
Unexpected things happen, and you may experience extenuating circumstances such as an illness or family emergency that leave you unable to run your businesses for various periods of time. Here’s how to prepare.
1. Establish a time frame. Your retirement might be five years or 25 years away, but you should have a good idea of when you’re going to move on. Even if that answer is “never,” you should still have someone in place who can run the business if you’re incapacitated. The Social Security Administration reports workers over 20 years old have a three in 10 chance of becoming incapacitated during their working years. So, be sure you have sufficient disability insurance to protect your income, as well.
2. Focus on the skills not realtionships. Don’t let nepotism or friendship dictate the de facto successor. Instead, think about where you want the business to be in the years after you hand over the leadership, says Beeson. What type of experience will be necessary to lead the business? You might need someone with international business experience or who is adept at landing funding or managing large teams. Make a list of the skills that your more mature business will require to continue its growth path.
3. Find the right fit. Once you have a clear vision of what the new leader’s job description will be, then it’s time to start looking for the right fit. “You may have someone who’s helped you while you’re in the trenches, but who might not have the skills necessary to run the company,” says Beeson. It can be tough to be objective about recruiting the best fit from within or looking for someone outside of the organization, he says. In cases where a successor is not obvious, it’s a good idea to get an outside opinion from your existing advisors or an independent management consultant, he says.
4. Start the challenge. Once your successor is in place, start giving him or her challenges that stretch or develop skills that will be necessary to lead the company, Beeson says. “You’re putting people in positions that intentionally round them out and give them experiences they lack, but also test certain elements of their leadership,” he says. Doing so when you’re around to supervise and advise helps ensure that your knowledge is passed on and that the candidate is truly ready to lead the business.
Related: 3 Reasons to Consider a Legal Exit Strategy