“Most companies do not have a formal succession plan and never expect it to be necessary. Another important component is the axis of succession. When developing a plan, many organizations allow for two categories of events: death/accident and retirement. Death/accident plans are reserved for the most pessimistic scenarios and must be completed before they are necessary. Age succession plans are generally phased in over a long period of time and often focus on a predetermined date, which will be set for several years in the future. Family businesses can use this model to prepare succession plans for outgoing owners, for the sale of a business or for unexpected management changes. Determine whether family members will become successors and what skills they need to develop to be ready. Define organizational structure, personnel changes that occur in the event of succession, legal and financial considerations, and risk management plans for potential problems. A business succession plan contains step-by-step instructions that set out the procedures for a business owner or major employee to leave the business. Our succession planning model helps entrepreneurs answer questions such as who is in charge of the business, how long it will take and what standard operating procedures should be passed on. Candidates for succession include qualified employees who are ready to fill the necessary roles.
Most succession plans leave two or three candidates for each role. This way, if one of them decides to leave or relocate the business, there is no need to restart the process. Instead, the company can simply move the list to the next candidate down. In our tracking model, we`ve provided a checklist for these items – if necessary, you can add or delete them. After completing an ongoing document, add it to your succession plan and check the list. A good practice is to take into account the lowest price for which the company should sell. Finally, if the business is put up for sale, it may take a long time to find a buyer willing to pay your price. The succession plan should include provisions on the waiting time before lowering the price, the amount of price it drops and the lowest amount. Succession plans can take many different forms.
Some business owners choose to manage a simple diagram, while others design multi-page documents. The complexity of your plan often depends on the specific nature of your company`s management team. Extensive research and visualization of different examples of succession plans can help you find the format that best suits your business.