Stanchart's take

SUCCESSION PLANNING

How can businesses go about making succession plans?

Succession planning is important for all businesses, and especially critical for family businesses and SMEs.

For many business owners, "letting go" of the business can often be challenging, and the first step to thinking about succession planning is to have a collective vision and goal.

While many business owners may prefer to keep the business within the family, there is sometimes a need to consider bringing in professional management, and it is necessary to determine the importance of continued family involvement in the leadership of the company.

Some of the most successful examples I have seen around succession planning are a result of intentional grooming of the next generation of leaders.

It is usually recommended that you spend a year or two working closely with your successor before handing over the reins, and have in place a thorough transition plan.

Building a succession planning team or task force is also helpful for business owners, where the core group can come together to deal with issues in a transparent way.

This team is usually made up of the board and the leadership team, and can help identify successors as well as active and non-active roles for family members.

Having succession planning plans formally developed and sharing them also reduces ambiguity among employees, and the greater transparency prevents a dip in productivity due to uncertainty.

A good succession plan should clearly delineate the individuals responsible for company management and governance, and identify those in ownership positions.

For family businesses, being able to communicate this clearly to the different members of the family is critical, alongside establishing a method for dispute resolution and establishing governance processes for involving family members in decision making.