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How to approach creating a strong succession plan

On Behalf of | Jun 15, 2021 | Business And Corporate Law

Forbes estimates that 86% of business leaders believe succession planning is important. Unfortunately, only 14% felt they had a good plan in place. One reason for this may be that building a succession plan forces Business leaders to confront incapacity or death. As a result, many entrepreneurs in Michigan prefer to delay the discussion or not have it at all.

The best way to encourage people to engage in succession planning is to start from the top down. If the business owner has a succession plan in place, then it becomes easier to encourage silent partners, department heads and floor managers to do the same. This may reduce the hostility some employees may feel when asked to train someone else who may possibly replace them one day.

Another reason it is important to start with the business owner is that it is the owner’s succession plan that may decide the fate of the company when it goes to probate. Will their spouse, children or siblings inherit the business? If they do, are they properly trained and equipped with the skill sets to do an equal or better job? What does the answer to that question mean for the workers of the company?

According to Forbes, one way that owners can ensure their succession plans are executed is by using an external board. This requires writing down and sharing the succession plan to ensure there is no confusion when the time comes. Some companies share these plans with not just the board or higher-up managers, but the entire workforce.

There is no need to tackle succession planning alone. Business owners may speak with investors, top managers, family members and potential shoe-ins for their position to see what solutions best suit the problems that may be created by their departure. This may help with not just ensuring a smooth transition to the successor, but also assisting with building the kind of legacy a business owner wishes to leave behind.