Handing over control of their business is probably far from the minds of many small business owners in Queensland. After all, their day-to-day focus is on managing and growing their business, not thinking about how they can extract themselves from their work.
While this is useful, there are many reasons that small-business owners may wish to create a succession plan and draft the commercial agreements that accompany this plan well ahead of time.
One of the most common reasons to undertake succession planning is to ensure the value and longevity of the business. This generally requires the business owner to identify successors to positions well ahead of time. In fact, a study from Right Management, a US provider of work management solutions, found that identifying and training talented workers was the main issue in succession planning.
Among the companies surveyed, 60 per cent identified talent attraction and retention as the main reason for undertaking succession management. Other key drivers included identifying and building a strong pipeline of candidates (33 per cent) and developing company talent (21 per cent).
For small businesses, these findings suggest that succession planning isn’t just about continuity at the management level – it also offers an opportunity to develop staff capabilities and incentives.
The survey pointed to the different measures that companies are using to track the progress of replacement candidates. Having measures that can track the progress of replacement staff, as well as broader statistics on turnover and staff retention, can ensure that a company succession goes to plan.
For Queensland businesses looking to engage in succession planning, it pays to discuss these options with a commercial lawyer. They will be able to advise on the legal and regulatory requirements of the hand-over process, giving you time to focus on the specifics of any internal management changes.