Avoiding Succession Planning? You Need To Read This.
In a recent article in the Zionsville Monthly Magazine, a fellow Zionsville business owner was highlighted, Robert Goodman, and his trials with Ulcerative Colitis. Not a comfortable challenge to have but Robert and his wife felt it important to share his journey with others, to both raise awareness of the disease itself and so his customers understood what was happening with his local jewelry business. I applaud Robert for the bravery to speak out and be vulnerable with his customers.
I’ve only met Robert once, he’s a business neighbor, right next door to my office. I noticed a week or so ago his closed shop on the brick street of Zionsville, well before the article ran last week. The article talked about Roberts battle with his disease and the decision he and his wife had to make over the Christmas break to temporarily close their store.
I pray that he has a full recovery and is able to get back to work soon. This situation highlights a subject that has arisen over the last several months, in many different settings and with different people that I’ve met with – succession planning and/or business emergency management plans.
It’s a worthy subject for discussion and consideration by serious business owners who wish to ensure the short and long-term viability of their business, not just for their own sake, but for their partners, employees and families.
While the two are definitely different types of plans, the basic premise is the same. A business emergency plan is a short-term view, and succession planning is a long-term view. What happens if…..
What happens if:
The owner cannot work tomorrow, next week or for a month or longer due to an accident or illness?
The owner has to take time off to deal with ageing parents out of town over an extended period of time?
The owner plans on retiring in the next year, 2 years or 5 years?
The business is affected by a snowstorm, earthquake, internet outage, fire or other catastrophic event?
The business is disrupted in some fashion and so are the daily operations of your business, your supply chain and your clients? Who will do what? Who will talk to whom?
The owner decides to sell the business, but his children didn’t know that was his/her plan? Or the owner sells the business to his children, but they are not prepared or desire to run the business?
Some quick steps to at least provide some advanced planning for your business in these types of events:
Ensure more than one member of your team/business is cross-trained on critical functions (e.g. customer management, bookkeeping, quoting, paying bills, paying employees and subcontractors, etc.) or utilize an outsourced model for some non-core functions to ensure they work regardless of events within the business.
Have an action plan – have something, in writing, accessible to all who need it! Don’t have a plan and hide it in locked drawer where the owner has the only key! Have a written succession plan in the event the owner (or other key members of the business) are unable to perform their duties due to illness, emergencies, unforeseen events.
Train your teams – even simulate events wherever possible. Think of it as a more complicated fire drill.
Review your plan frequently, at least twice per year if not quarterly – things change, all the time.
Make this subject a discussion point during strategic planning meetings, staff reviews or leadership meetings. It may be uncomfortable, but not as much as having your business fall apart because you didn’t anticipate not being around.
This just scratches the surface of the subject and by no means contains all the things you need to consider for a solid emergency/succession plan. There are not only operational business issues to deal with but financial ones as well. Insurance coverage, key-man insurance policies, legal, tax and family finance concerns. All of these things need to be addressed up-front versus during an emergency.
If you need help creating a succession plan, give TIER321 a call. We are happy to help you in your journey to work through strategic choices and making sound decisions that lead to implementation.