Guide to Succession Planning

How to pass the torch and keep your business alive

By Constance Gustke

1. Serves as a blueprint for hiring or training successors.
2. Reassures the marketplace that the company will continue to function.
3. Defines the future of the company.
4. Can reduce real estate taxes when transferring a family business.
5. Provides a flow of well-trained managers armed with definable goals.

Action Steps
The best contacts and resources to help you get it done

Evaluate your responsibilities

Create a job description by listing all your responsibilities. Experts advise that you make a list of requests that suppliers, clients and employees ask of you. Then break it down further by listing the skills, attitudes and knowledge that you use to meet these demands. This is your blueprint that you can use to evaluate staff members. Also, list the number of additional staff positions that would need to be filled in your absence.

I recommend: Review examples of results-oriented job descriptions and a sample CEO job description.

Make the plan

The first step is facing the ego-busting reality that, one day, you'll be replaced. Be committed to creating a transition plan so that you can communicate your needs to others. Discuss these ideas with a mate and company management clearly and often.

I recommend: Review a sample succession planning policy at Workforce Management. For family business succession planning, the Family Business Consulting Group offers online surveys and advice to help refine a plan. Or create your plan on Succession Wizard software.

Choose potential successors

Consider more than one successor, especially ones who can be easily promoted within six months time. And then spend time developing them: allotting more decision power and letting go of more control of the company. Fold these responsibilities into twice-yearly job reviews that include sharpening successor skills or transferring information.

I recommend: SuccessFactors.com offers succession management software and Webinars aimed at developing next-generation talent. For additional pointers on finding the best successor, go to Business Owner's Toolkit or Entrepreneur.com.

Lay the financial and legal groundwork

Consider early on the terms and funding for a buyout.

I recommend: Scan this checklist for buy-sell agreements for a business. The SBA has some tips on a timeline for transferring ownership.

Helpful advice for making the most of this Guide

• •  Consider forging a succession plan as soon as you've moved beyond start-up stage.
• •  Considering setting up an advisory board to help ensure a smooth transition from one leader to the next.
• •  Create a simple transition plan that doesn't feel confusing to executives.
• •  Use good advisors such as accountants and lawyers along the way.
• •  Trim anything in your business that doesn't relate to your succession plan.
• •  Think of succession planning as a seamless process, not a single event.