Succession planning isn’t the sort of business activity that can be undertaken quickly – it requires months, sometimes years, of preparation in order to have the correct processes in place to handle this shift.
At the same time, companies need to be sure they are completing every step of this process in order for this process to run smoothly. In fact, there are three important steps that companies will need to pass through before they will be ready to implement a succession plan. These three are:
1) Find a potential successor
Among the biggest challenges in succession planning is simply to find a person who is ready to step into their role.
This doesn’t have to be limited to just one person. Many family businesses will consider a number of different family members when undertaking the succession planning process, while other firms may create official positions to nurture workers for senior roles.
2) Draft a succession plan
Once you have a a person in mind who can take over responsibility for a company, the next step is to draft a succession plan that will detail how this person will move into this role. This will involve laying out the role which is being handed over and any other relevant legal considerations that accompany this sale.
It is also important to have a lawyer involved in the drafting of this document in order to ensure it is in order.
3) Develop a roadmap
Once a succession plan has been drafted, it will be important to draft an implementation roadmap to ensure this process runs smoothly. This plan will outline exactly how different responsibilities will be handed over and set out the key milestones that will accompany this. This will give a concrete foundation to your succession plan and ensure all parties are comfortable with the process moving forward.
For more on succession planning, and advice on handling any accompanying contracts, make sure to consult with a commercial lawyer.