You’ve worked hard to build a business that you are proud of, but what comes next?
Studies show that the average business owner is 50 years old. While executives in the baby boom generation are now between 57 and 75 years old, succession planning is vital for younger executives as well. The need for planning was magnified by the “Great Resignation,” where 47 million Americans quit their jobs in 2021.
The sudden loss of leadership often throws organizations into a downward spiral with no clear direction, loss of critical employees, and plummeting revenues as once-loyal customers struggle to connect to the new business leaders.
A high percentage of small to mid-sized businesses are family-owned. However, statistics show that only a small portion of companies successfully transition to the next generation. Further, companies without a succession plan struggle to maintain employee morale and engagement, negatively impacting sales and customer retention.
A successful succession plan covers four primary phases:
- Preparation – organizations must meticulously document procedures, update systems, or replace them with modern applications designed for tomorrow’s industry leaders and ensure a smooth knowledge transfer.
- Evaluation – leverage specific criteria and plans to evaluate potential new leaders, whether they be family members, existing employees, or external experts.
- Transition – when existing leadership can slowly transition knowledge and responsibilities to the new management team over time, business hand-offs are most successful.
- Exit – executives can maintain a lesser role as a mentor or advisor to ensure continued
success for the company, customers, and employees once they have transitioned out of the organization.
Learn more about these four steps with the Succession Planning Playbook.