It’s not unusual for individuals with a home, a retirement plan, and other valuable assets to think about where they want their wealth to go when they pass away. Whether you choose to create a last will and testament, a living trust, or some other form of estate plan, it’s wise to take the steps to legally ensure that the fruits of your labor are passed on to your loved ones.
The same basic principle applies to creating a succession plan for your small business; you’ve put a lot of time and effort into creating a successful establishment, and it’s only natural for you to want assurances that it will endure when you retire or if you’re no longer able to run it.
A succession plan focuses on creating a strategy for uninterrupted operations if key players in your organization are no longer involved. It not only identifies top management — without whom the company couldn’t function for long — but also potential replacements who can be trained to take over executive/management positions.
Studies have shown that nearly 60% of small businesses lack a succession plan, and that is a major oversight. With that said, you may wonder just why it is so important to have a business succession plan in place.
Consider the Long-Term Future of Your Company
Running a small business often requires that you juggle a range of responsibilities, and that makes it easy to get so caught up in your day-to-day needs that you put long-term planning on the back burner, unintentionally or not.
Creating a succession plan gives you the opportunity to think about where your company might be in a year, five years, or even ten to twenty years from now. You’ll consider which employees might move up when others leave, how you might help them develop, and whether expansion, additional hiring, or changes to management structure would be in the cards.
Get Everyone on the Same Page
When there’s no plan of succession in place, and little communication is held regarding long-term plans, leadership within your organization may not be aligned. There could be confusion about the chain of command or incorrect assumptions about who should take charge if there’s a vacancy and a resulting power vacuum.
Succession planning not only creates a clear strategy but provides opportunities to communicate with employees and ensure that everyone is on the same page.
Plan for the Unknown
As the saying goes, when you fail to plan, you are planning to fail, so you need to know what will happen if a key employee is unexpectedly absent — whether that is due to resignation, illness, or even death — and no one is prepared to fill the position.
Without a plan in place, important tasks could slip through the cracks, and you might face considerable and costly downtime while you search for a suitable replacement. A succession plan helps you avoid such dilemmas and continue your operations with minimal interruption.
Boost Confidence and Morale
Paying competitively and offering perks can help your company attract quality employees, but job security is another major draw for many candidates. Creating a succession plan ensures a smooth transition when an upper-level manager leaves, minimizing stress for employees counting on uninterrupted operations and steady paychecks.
In addition, creating a line of succession can help to motivate individuals interested in advancement. The prospect of upward mobility encourages mid-level managers to embrace a leadership role and opens the door for lower-level employees to move up.
Create a Business Succession Plan Today
Altogether, a business succession plan is necessary to keep operations running smoothly and ensure that everyone is on the same page, especially in the event of unforeseen circumstances. It also helps to create stability that drives motivation and confidence.
If you need assistance creating a business succession plan or with any other business law services in Prairieville or South Baton Rouge, contact an experienced attorney at Kallio Law Firm, LLC today to enjoy a range of legal services tailored to your business needs.