Dealing with succession risk

This article from http://www.capitalmagazine.ca/ talks about how wealth affects subsequent generations, and how a family office can help deal with the issues and challenges. This is by far the best article I've read about using a family office. Click here to read the story.

Succession planning and your business

This new article from http://www.getgrowingforbusiness.scotiabank.com/ talks about the components of a successful business succession plan, as well as an outlook for Canadian small businesses. Click here to read the article.

Where's the talent? Assessing possible business successors

Now here is a really handy tool I've just found on the http://www.capitalmagazine.ca/ site. It's a form you can upload or print - for free - to help you assess and compare candidates for taking over your business one day. I'm always in favour of tools that help someone get organized and get moving. Click here to access it. The attached photo of the worksheet is from the site mentioned in this post.

Succession management: good to talk about, hard to practice

This article from Business Standard talks about the need for business succession planning at all levels of an organization, not just the top. The author makes the point that this type of planning and development is often overlooked. To read the article, click here.

Secret to Succession: You've got to let go

Another interesting perspective from the Globe and Mail. Click here to read this article about business succession taking place as boomer entrepreneurs look at retirement.
The attached photo is also from that story in the Globe and Mail.

Monitoring and assessing your successor's progress

So you've selected someone to take over your business when you retire or sell. You've put training programs in place or mapped out an educational plan for your successor. What could go wrong?

Despite all of your careful preparations and efforts, it's possible that the person you have selected as your successor is not going to work out after all. Perhaps the person is less motivated than he or she should be, does not seem to be able to catch on to how things are done, has lost interest, or perhaps you are simply not satisfied with his or her effort or attitude. It's important that you have ways of assessing and monitoring your successor's progress to learn his or her new role. Your assessment must amount to more than "just a feeling that things are not going to work out", particularly if your successor doesn't agree with that assessment.

To start off your working relationship with your successor, spend some time talking about exactly what each of you wants out of this business relationship. Make sure you are both clear on how long his or her training period will last. Set out goals and timelines. Agree on how progress is to be measured and how your successor will get feedback and from whom the feedback will be obtained. (For instance, will you be the only person monitoring his or her progress or will there be someone else directly involved as well, such as a senior manager?)

The idea is to make sure that both of you know exactly what is expected to happen and when it is supposed to happen. This will give your successor the best possible chance of being successful.

Though it may seem overly formal if your successor is a family member, you need to learn to treat him or her in a businesslike manner. You are about to invest a lot of time, money and effort in him or her, and you are much more likely to get a good result if the process is documented, clearly understood and professional.

During these initial conversations, you should tell your successor what will happen if he or she is unable or unwilling to achieve the success you both expect. Is this person going to be the owner of the business no matter what, or is it possbile that if he or she does not fit well into the business that you will look elsewhere for a successor? How long will you take to decide that?

Also consider how long your successor will have to try out working for you before he or she decides that running your business is not what he or she wants to do. Set a time line so that your successor will not string you along unneccessarily. These are issues that need to be clearly understood by both parties and even put into writing before your successor starts working for you.

When you make decisions about teaching your business to your successor, put those decisions into your written plan. The plan should be broken down into several specific, measurable goals with specific timelines for achieving them. Obviously the goals will differ depending on the type of business you have. Some examples of measurable goals are:

Dollar amount of sales
Number of new contacts made
Number of calls or jobs successfully completed
Number of bids successfully made for projects
Number of repeat customers
Percentage of market share increase
Improvement in efficiency
Increase in public awareness of the product or service
Decrease in expenses in targeted areas

When goals of this kind are set, discuss them with your successor. Be clear about targets, time lines and expectations. Agree with your successor about how his or her progress will be measured. Agree to meet again to discuss progress on a regular basis. Keep the information flowing between you.

For example, if you have set a goal of $25,000 per month in sales, review your successor's sales figures each month. Is he or she consistently selling only $10,000 per month instead of $25,000? If so, is there any way you can help improve those numbers through more training, mentoring or feedback? Is your successor gradually increasing sales each month as he or she learns the ropes?

Make sure you and your successor talk about the targets regularly. Do not take him or her by surprise many months after a target is set by abruptly stating that he or she is a failure at the job because goals have not been met.

My book, Succession Planning Kit for Canadian Business, devotes a full chapter to preparing your successor and monitoring progress. I'll add to this topic here on this blog on a future date.