What succession planning is there in your business?

December 16th, 2011

The other day I received an email from Business Hawkes Bay and there was a question about succession planning, which made me think – how many business owners have given any thought to that area of their business? From my experience working across a range of industries, not many!

So how does your business rate?

Business Hawkes Bay had 4 categories and you can decide where you fit in

1.    Succession plan in place and being rolled out
2.    Succession plan in place but not started on roll out yet
3.    I should have one but don’t
4.    I have no need for one

(I’d suggest if you answered number 4 you may need to rethink your strategy – it’s much better to give some thought to it now rather than when you’re in crisis)

So what value does succession planning bring to a business?

1.    Internal analysis (running the business more effectively) 
Allows you to take a reflective view of your current business operation from the inside. It helps reduce risk and develop the skills of your existing team.

2.    External analysis (deciding if you’ll stay in that market) 
This allows you to see where your business sits in the current market. What are the trends, what direction is the market moving in and are you keeping up (Polaroid is a good example of a company that was a market leader and now no longer exists). External analysis helps you decide if you are to remain in that market, change direction or sell.

Like anything once you have identified what needs to be done a timeline needs to be set. Remember the work around succession planning is probably over and above your normal daily activity so there needs to be a level of structure to what you are going to do.

What are some barriers to completing a succession plan?

1.    The directors see no need
2.    There is an emotional aspect to the business and the directors / managers are not able to let go
3.    Management’s focus is solely day to day and no thought is given to the governance side of the business

According to the Department of Labour between 2004 and 2051, New Zealand’s population is expected to increase by nearly one million people, going beyond the five million mark by 2041. The largest growth period will occur between 2011 and 2037, when the baby-boomers (born 1946-1966) move into the 65+ age group adding at least 100,000 to this age group every five years.

A lot of those baby boomers are the business owners of today and without any thought to succession planning they are placing their business at risk. So take the time, stop and reflect on your business and you may be surprised with the outcomes you can achieve

If you would like assistance in reviewing succession planning for your business don’t hesitate to contact PlanA Consulting

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