Rodefer Moss, CEO, Jimmy Rodefer discusses succession planning in his recent article in the Knoxville News Sentinel:
As baby boomer business owners near retirement, a common thread binds together the majority of them: they don’t have a succession plan.
Some haven’t gotten around to it. For others, the business is their baby: they created it, built it, persevered through the tough times, and led the charge in good times.
However, time is a relentless foe. A succession plan is mandatory for a business to continue providing financial security for the owner’s family and employees and to avoid potential chaos, or destruction.
According to the 2014 U.S. Trust “Insights on Wealth & Worth” survey, many business owners view succession planning as enthusiastically as a trip to the dentist. Among the survey’s findings of 680 high-net-worth individuals with $3 million or more in investable assets:
“Two thirds of (business owners) do not have a formal succession plan, including seven in 10 business owners over age 50;”
“The reasons given for not having a succession plan suggest more than procrastination. Many business owners haven’t made important decisions and/or believe that a will, or verbal discussion, will be sufficient;” and
Although “two-thirds of business owners … don’t have a formal succession plan for their businesses, most will leave it to family members to sort out.”
Survey results showed that only a bit more than one in 10 owners expect someone in the family to take command of the business.
That’s all the more reason to not let a lifetime’s work crash against the rocks of unpreparedness. Put your plan on paper. Use it to answer critical questions about the type of person who can lead the business, the personal qualities and skills they’ll need, and the leadership traits the job demands. Then develop a list of candidates. Conduct research on their strengths, weaknesses, and personal assets and liabilities.
These aren’t easy identifications for business owners to make alone because of the time and emotion involved. Trusted outside legal, business, and financial counsel are powerful assets, but recognize that some of the advice might be a counselor maneuvering for a position with a new leader. Your family has a stake in this, too, so it’s best not to cut them out of the process.
It’s your decision whether to approach a candidate about the job directly or indirectly, by getting to know them first. Decide whether you will bring the person on board as your designated successor, or in an executive role to first evaluate his or her performance.
You’ve spent a lifetime working in your business. Now work on it. Introduce your successor to your contacts and relationships and share the intimate knowledge only you know.
A well-crafted succession plan will increase even more the respect in which you’re held.
You’re a builder. You’ll find something new to do as you watch how your succession plan ensures your legacy in the company you built.