How to Create a Succession Plan for Your Business

A succession plan can help you guide the future of a business if and when key participants leave. If you care about the future of your business, or if you’re facing an uncertain future yourself, a succession plan can ease your concerns and make sure the business remains consistently in operation indefinitely. 

Creating a succession plan is simpler than most people initially suspect. 

Prepare Your Personal Life

If you’re thinking about the future, you might start with preparing your personal life. Are you planning for succession because you’re thinking about retirement? If so, you’ll want to spend time getting your finances in order; where is your income going to come from? How much do you really need? Are you protected against the threat of a recession? 

If you’re planning for succession because you’re preparing for a potential future illness or death, you may use this time to put together a last will and testament. 

Set High-Level Organizational Goals

When you start planning the succession plan for your business, your first responsibility is setting high-level objectives for the organization. What are you hoping to achieve with this plan? 

Consider: 

• Longevity. Are you interested in making sure the business remains in operation for as long as possible, with stability for all its employees? 
• Brand consistency. Are you worried about the image and reputation of the brand in the future, once the current leadership leaves? 
• Transitory smoothness. Are you more concerned about getting through the initial rough patch after your departure? 
• Similarly, you’ll want to think about how much time and money you’re willing to invest in succession. Do you want a cursory transition plan in place, or would you rather spend time making sure every individual in your plan is trained and able to take over at a moment’s notice? 

Identify Key Players and Roles

From there, one of the first steps you’ll take is identifying key roles and players within your organization. Lower-level employees who leave may be able to be replaced quickly within a week or two, with newcomers easily trained on their responsibilities. But what about leaders in the C-suite? What about your top managers? 

Note the positions most vulnerable to loss; these are the ones most important to account for in your succession plan. 

Identify Key Vulnerabilities 

Which positions would be hardest to lose? What forms of loss would be hardest? For example, if several top managers left at the same time out of contempt for the brand, how would your business be able to recover? What if someone at the C-suite level died unexpectedly? 

Similarly, think about the ways your business could suffer from any of these losses. Would it struggle to continue basic operations? Would it suffer from the absence of strong leadership? Would it suddenly lack direction? These are the gaps you’ll need to close in your succession plan. 

Name Successors 

It makes sense that a good succession plan would name successors, but going through this step can be challenging. You’ll need to not only figure out who in your organization would be a good fit to step up into a leadership position, but also see if they’re interested. You may find a perfect candidate in your finance department to step up to CFO when your current CFO retires, but if they’re not interested in the job, you may not be able to rely on them. 

Have frank conversations with both your leaders and their subordinates to figure out who might be a good fit. Consider not just skills and experience, but also personality. 

Institute Training and Development 

Next, you’ll want to institute training and development policies, including some that take place before the need to call upon a succession plan. If you have named successors, have them shadow your current leaders occasionally so they have a better understanding of the responsibilities of the position. For other positions throughout your organization, consider using cross-training to make your employees more flexible—and capable of taking over during a crisis. 

Put Contingencies in Place

Inevitably, even the best succession plan is going to experience points of failure. There will be people who are unable to take over, and missing training procedures. For these, it’s important to have contingency plans in place. What should the company do if it experiences a crisis? What backups are in place to keep things running while the new leaders attempt to firm up new policies? 

Creating a succession plan isn’t typically fun, but it’s necessary if you want your business to survive. The good news is it doesn’t usually need to be done all at once; instead, you can take your time, gradually adjusting the plan as you come up with new ideas and solve old problems.