Entrepreneurs of small ventures have a lot to think about when it comes to helping their business achieve success over the long term. From continually innovating when it comes to products, services and their delivery, to being adept at areas such as marketing, sales, customer service, human resources and finances, there is much to think about day in and day out. However, small-business owners should consider their retirement plans too.
It is always a good idea for entrepreneurs to spend time considering the following:
- The long-term needs of their organization
- Potential future threats and weaknesses
- Who the successor may be who can take over the running of the business in time
- How the venture should be marketed in coming years to factor in the new management
- How all of these changes should be handled
If it’s time for you to start really considering your own and your company’s future, read on for three helpful tips you can keep in mind for effective succession planning.
1. Start Thinking About It Today
Although most entrepreneurs spend hours every week considering how they can grow their business or run it more effectively, many don’t often stop to think about the far-off future. Retirement for small-business owners is something that should be considered sooner rather than later though, as there is much to think about before you hand over the reins to someone else.
What you may not realize is that succession planning actually takes time to both strategize and implement, so you don’t want to leave it until the last minute. It typically takes about a year or more to develop the right plan for a transition, and then a few years more to implement it.
Succession planning involves coming up with a shortlist of potential candidates who can take over the role of “top dog” or, if you want to sell the business (or your share in it), you need to take your time putting things in place to make this happen.
If you decide to hand over your venture to a family member, you may very well have to introduce them to the business in the first place, and start to show them the ropes as soon as possible. All in all, you will save yourself and the rest of the team a whole lot of stress if you don’t put things off until the last minute.
2. Know Your Goals and Objectives for the Future
The next step to effective succession planning is to make sure you’re very clear on your future goals and objectives for the business. To help ensure your venture stays around for the long term, you need to know where you want it to be heading in five years, ten years, and beyond. Also, think about the best ways to make that happen, with and without you working in it.
When you spend time considering your goals and objectives you’ll be able to more easily evaluate potential future threats to the business, long-term weaknesses that need to be addressed, and opportunities that could be taken advantage of over the coming years.
Knowing these details will in turn then help you to work out the best person or team to manage the business in the future (i.e. planning for what skills or specific experience is likely to be needed most). It will also help you to see if you need to hire any specialized business coaches, financial planners, brand experts or other contractors over coming years to provide advice.
Thinking about your goals and objectives also helps you to firm up your own personal retirement plans. You should consider your future financial and lifestyle goals so that you can work out what your cashflow and time requirements will be when you’re ready to retire.
You can then work backwards from there to decipher when you should handover the reins to the business, and/or how much you need to sell your stake in it to be able to retire in the manner you’d like.
3. Develop a Detailed Plan for the Handover
Lastly, you must also come up with a detailed transition plan that covers step-by-step strategies to help the process run smoothly. The plan should also include a suggested timeline of likely handover events. For example, you may conduct a handover all at once, or gradually cut back on your hours in the business — this needs to be planned for either way.
In addition to the specifics of how you will introduce new managers or owners to the venture, your plan should also cover ideas for marketing and public relations tactics to be utilized at the time. You may want to hire an external public relations specialist, for example, to create and then send out a press release detailing the news. It often pays to set aside a specific budget to cover marketing and PR over the transition period too.