Why succession planning is important.
If you’re like me, you were both excited and concerned upon hearing that Harrison Ford will be starring in another Indiana Jones movie. Excited because I really love these movies – well most of them (more on that later). Concerned because Harrison Ford single-handedly makes the movie a blockbuster. In my humble opinion, no actor plays the role of the brilliant, academic adventurer who is likable and relatable with perfect comedic timing better than Ford.
What happens when Harrison Ford is ready to hang up his hat and whip permanently? It’s obvious Shia LaBeouf won’t carry on the tradition (apologies, but he wasn’t the right fit for so many reasons that we don’t need to get into here). Will this movie franchise just end? Not when there’s still money to be made. So, what is the plan for Harrison Ford’s successor?
This is a question that many business owners don’t think about until it’s too late. No, not who will take over from Ford, but who will take over leading your business when the time comes.
Maybe you assume your daughter or son will pick up the mantle. Maybe you assume you’ll sell it to the highest bidder. The issue in both these scenarios isn’t the possible end state, it’s the word “assume.”
When thinking about the future of your business, the worst an owner can do is assume. Whether you’re planning to remain at the helm for the next 20 years or you already know that you want to be out in five, a succession plan is vital to best establish the legacy of your company.
The amount of detail and urgency of the action items in the plan will depend on your answers to a few key questions. Hint: They may look suspiciously like the same questions writers answer to tell a good, even great, story.
There’s a reason for that. A succession plan is exactly that – the guide to creating the future story of your business.
The Who
How involved are you in the day-to-day operations of your business? Are there any aspects of your business that are solely dependent on you?
Do you have someone identified to be your successor? Have they, and your board, agreed?
No one will run your business exactly like you. And that’s ok unless your clients only want to work with you. Future-proof businesses are not beholden to one person. Setting up the right structure and finding the right person (or people) is key to the survival of your business.
The What
What kind of payout do you want? Or need? Is money a top priority or is giving back to a particular cause more important?
Are you ok with getting paid over a set time or do you want it all at once?
Money isn’t everything to everyone as shown by Patagonia’s founder. However, it is usually important and can have implications regarding future paths that you are or are not willing to consider.
The Why
Are you planning to retire?
Do you want to move on to start a new business?
Has your company outgrown your ability to lead it effectively?
Your reason for exiting your business will have an impact on the transition to the next stage of your and the company’s life. Ensuring this news is positively communicated from both sides will enhance success moving forward.
The When
How long is your runway? Do you want to be fully out of your business in three-to-five years, 10+ years? Tomorrow?
Hopefully, your answer to this question is not “tomorrow,” especially if you’re hoping to maximize your cash-out. Putting all the right pieces in place takes time.
By identifying the end of the timeline, you can more concretely map out a plan for identifying, onboarding, and training (as needed) your successor.
The Where
Where do you see the future of your company? Will your legacy be growth?
Would you be devastated if your company was shut down? What about if it was fully integrated into another organization?
Don’t underestimate the emotional aspect of succession planning. After all, you started your business for a reason and are very proud of what you and your team built.
No one will treat your company or your employees exactly as you did, so take the time to really think about what you see as the best potential paths for the future
And what about The How? Well, that is the actual succession plan you will put together. Its goal is to create the legacy of your business as you envision it.
So, what about the future of Indiana Jones? That’s up to the experts at Disney. But if you ask me, my vote goes to John Krasinski.
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