Business owners should consider how they want to exit the business, as soon as possible. The first step is to establish the criteria to determine when the time is right. If you want to sell your business outright or have family or employees buy you out, one aspect of preparation is succession planning.

Succession planning increases the likelihood of retaining experienced employees that are prepared to assume key responsibilities to maintain the business and its relationship with clients and vendors in such circumstances. Putting a talent succession plan in place will help you prepare for this eventuality.

The main purpose of the succession plan is to put in place a series of steps to have a stream of employees who are trained and groomed to step in to key positions. This way the Company is prepared to weather unforeseen employee turnover and to help when the time comes to have new ownership.

Here are the steps for a succession plan:

  • Identify the key tasks that must be performed for the business to remain successful.
  • Identify the senior employee who knows and oversees those tasks.
  • Consider the impact on the business to continue to meet its commitments should that employee become unavailable.
  • Determine if there is a current employee who could step into the role and perform those tasks, if necessary.
  • Evaluate if that employee has the necessary knowledge, skills and traits to do so, with or without additional training or coaching/mentoring.
  • Identify any required training and mentor.
  • If the business doesn’t have a candidate employee to fill that role, then recruiting for such an employee would need to be done.

An important factor is knowing what the employees’ career goals are. It will be non-productive to train an employee for advancement if they do not have long-term plans to remain with the business.

Don’t assume that the “next in line” employee will be the best candidate to assume an additional or more senior role. It’s important to know employees and how they behave in different circumstances. Not all employees will do well with additional responsibilities.

Those individuals who are intended to be in the succession pipeline need to be informed they have been selected. Be sure to explain that there are no guarantees to assuming an advanced role as circumstances can change for both the business and the employee.

The succession plan for your business must include a successor for the key leader or owner of the Company. You may need to backfill your role if you chose to retire or become incapacitated to ensure the continued viability of the business.

Once you’ve identified the talent needs, you need to provide the training and professional development they require. Training courses, on-the-job training and career coaching and/or mentoring are all tools that can be utilized to effectively prepare an employee for greater responsibilities. A great way to get started is with job rotation and cross-training. It’s an effective method to ensure that day-to-day tasks are covered when employees are absent. Don’t forget that your employees will likely need to enhance their soft skills, such as communication, critical-thinking and leadership development.

Take advantage of natural opportunities to test your plan. Have a potential successor be assigned as “acting” while they assume some responsibilities of a manager taking vacation. These control occasions allow the employee to gain confidence and put their training into action and allows you to assess their development and determine if additional training is needed.

Succession planning often leads to the identification of both talent gaps within an organization and employees who are carrying too much responsibility for their positions. Once identified, incorporate your succession plan into your hiring, recruiting and training strategies.

Change is a constant for small business, but 2020 was a year of extraordinary challenges for employers as they had to anticipate and react to changes brought about by COVID-19, shelter-in-place orders, new leave laws and trying to plan for possible closures and an unusually high number of absences. All this change has made it clear that succession planning is a task that should not be left until later.