When buying and selling a business, you must have a succession plan in place for a smooth transition. Find out what succession planning is, and how to prepare your own plan.
Plan for Progression
Whether you’re selling a business, retiring, or buying a business, it’s important to think through the succession planning process. This helps ensure you have a map in place for the progression of your business. Companies may wrestle with ways to train and develop employees for new roles, but making a plan for the future is especially critical during business acquisition. Succession planning will make sure you have the right people ready to take on new roles after you buy or sell your business.
What is succession planning?
Succession planning is the process of finding people to fill leadership roles within the company as organizational changes occur. It includes identifying existing employees who can take leadership roles, along with figuring out gaps where training or new hires may be necessary.
How does succession planning apply when buying and selling a business?
As you complete business acquisitions, structural changes are bound to occur. If you buy a business, perhaps the previous business owner acted as general manager. But after buying the business, you’d like to take more of a hands-off role, so you need a plan for who will act as general manager. Creating that plan is succession planning. Part of the transition process when buying the business is identifying current employees who might be ready to fill new roles. If you’re selling your business, you can help the new business owner with succession planning since you will know current employees’ strengths and weaknesses.
Steps of Succession Planning
When you’re creating a succession plan, you’ll want to do follow a few key steps.
• Identify the roles that need to be filled. Take a look at existing roles and identify where gaps may occur.
• Think of roles that need to be created. Consider where additional positions would benefit the business structure.
• Define the ideal candidate for each position. Think through the skills necessary for each available position.
• Examine your current pool of employees. Attempt to match their skills with the open positions you currently have or those new positions you intend on creating.
• Prepare training programs and create development plans to prepare employees for new roles. Work on areas of weakness and develop their strengths.
• Most importantly, keep your plan simple. The plan doesn’t need to be perfect, you just need to have a plan in place so you understand the organizational changes that will occur when buying and selling a business.
• Be open with employees. Don’t make promises; be realistic. If you’re buying a hotel, you might be considering your front desk manager for your general manager. Talk with your general manager about development opportunities and realistic expectations for career growth. If the growth doesn’t occur within your current employees, be willing to hire new ones.
At the heart of succession planning is employee training, growth, and retention. You want your current employees to become better for your business, even if that means training for a new role.
Talk with the Experts
Just like you would use experts when buying a business or selling a business, you might need to speak with succession planning experts if you’re acquiring a larger company that requires an in-depth plan. Speak with other businesses in your area to find out who they trust with their succession planning
If you’re interested in buying or selling a business, contact the experts at Emerald Coast Business Brokers to locate pre-screened businesses that are ready to purchase. They can help you from start to finish, including creating a succession plan in conjunction with the current business owners.