Succession planning is essential for small businesses. In fact, they need to think about succession as soon as the business gets established. There needs to be a well thought out succession planning process to select the best one, rather than a knee-jerk reaction to fill the void.
In essence, selecting a successor is the first stage in planning a successful succession. You need time, since even if a family member appears to be fit for succession, the selection may turn out to be unsuitable a few years down the line. Indeed, the challenges of succession planning are many.
Let’s look at some of the biggest challenges in Succession Planning.
Being Hesitant in Selecting a Specific Family Member
Businesses are hesitant to pick up and anoint specific family members to succeed them as the business head. In fact, this is one of the basic challenges of succession planning. Even if a specific person is outside the family, the founder may be hesitant in selecting him or her. There are often too many constraints in announcing a specific person as the anointed one. Founders need to overcome this disabling hesitancy and come up with a clear plan to anoint the chosen person.
Thinking About Own Mortality
This is one of the most emotional challenge of succession planning that founders and partners face. When you think about succession planning, it automatically forces you to face the universal truth of mortality. This is what is scary for most people. It is uncomfortable to think about one’s own retirement, death, or disability. You need to prepare yourself for succession planning by overcoming these scary emotions.
Comparing with Yourself
This is normal for partners or founders of businesses to compare likely successors with themselves. Far too often, they narrow their view to qualities that they think they possess. This is a bias that most business people tend to possess. This is why it is often observed that men usually pick men and women pick women as their successors. People may also have other kinds of bias such as those with financial degrees pick up people with financial degrees, scientists pick up scientists etc. You need to come out of this cocoon and be open to the most suitable person.
Lack of Strategy
While planning a successor, you need to have a strategic approach to the problem. You need to have a well thought out plan, but what happens most of the time is that the plan lacks a cohesive strategy.
Succession planning is not a one-time affair. You need to revisit the plan every year and see how it works. There may be changes in family or personal front. There may also be transitions in the industry and conditions in the market. This is why you need to update your plan according to the situation. In fact, failure to update oneself is one of the most prominent challenges of succession planning. Nevertheless, the scope for fine tuning the plan is always there. In fact, the experience you gain in conducting business and in overseeing the workings of a successor a few years down the line can help you in improving the succession plan.
Choosing a successor is a step by step process. If you blink at any stage, you may miss the opportunity to select the most suitable successor. You need to keep track of these points and plan accordingly.