Building a business takes a lot of planning and hard work. While defining a business plan and putting it into effect to become successful is usually the first priority, other issues should also be considered. Often overlooked is the importance of succession planning. All of the efforts you put into building your business can be destroyed quickly without a comprehensive succession plan in place. When there is a succession plan established, your effort and life’s work can remain better protected and continue to thrive even when you are not at the helm.
Why Succession Planning is Essential for Every Business
A business plan puts the pieces together as to how a business intends to run and what the strategy is to be successful. A succession plan explains how the business will stay open and continue operations when the owner is no longer serving in their critical senior capacity. For example, if a business owner suddenly passes away or decides to retire, then there must be a plan in place for how to fill the void so the business can continue to function without a hiccup.
A proper succession plan will be detailed in terms of every step that should be taken when an owner is leaving or is no longer around. It will also discuss who will take over ownership.
There are many reasons why succession planning is essential, including the following:
- Clients that remain loyal to a business will want to feel assured that their service or product will be unchanged in the absence of a longtime owner. If clients believe that things will not be the same or their expectations are not met, they are not likely to continue to support the business.
- Employees need to feel secure in their jobs. When an owner is no longer present, employees can be worried about their future and may start to look for other opportunities. When it comes to highly skilled and specialized employees, these losses could be difficult to replace.
- Without a smooth transition from an owner to a replacement, the troubles getting reestablished could cause issues with business operations which can lead to loss of customers and employees.
- Competitors can be more of a threat to your business when there is instability in leadership.
- Keeping a business running as normal can be very difficult without a succession plan. A business will not have a clear focus on the mission moving forward, nor will it have a professional in place who can serve as an essential decision-maker.
- A succession plan names who will take over ownership. Without a plan, in an attempt to quickly have a business equipped with leadership, there is a greater risk of putting an unqualified individual in place.
Speak to an Attorney at the Leiva Law
Though you do not want to think of a time when you would not be a critical part of running your business, it is imperative to have a plan in place should anything in life change. A succession plan is a protective measure for your business.
Call the Leiva Law Firm today to learn more at (818) 519-4465. Initial consultations are free.