Having a succession plan is vital to ensuring the future operation and success of your small business. Although every company needs to consider succession planning, it is most critical for small and family-owned businesses and should be included in business owner estate plans. To highlight the importance of succession planning, let’s take a closer look at what happens when there is no succession plan in place.
Passing On Leadership
The most basic issue a business can face is lack of leadership. Most owners play a significant role in day-to-day operations. When a business owner dies, it can dramatically impact operations. Employees may be left with no one to monitor their workflow. Business objectives may be at risk. Conflict between personnel may go unresolved with no mediation. Important decisions could be put on the back burner until the right leader is chosen. Without a plan in place, lack of leadership and decision-making can halt business operations.
The Value Of The Business Could Diminish
Most businesses grow through years of hard work and relationship building. When the individual responsible for creating those relationships passes, the connections they made may suffer as well. Customers will want assurances that they will continue to receive the same level of service and support that they did in the past. They can quickly jump ship at the first sign that the business may not be able to do so.
Transitions Take Time
Time is money. If a business cannot meet the expectations of its consumers, investors or employees, they are heading down a dark path. Competitors are always searching for ways to increase market share and a business’ unplanned change in management and operations may be a prime opportunity for them to steal your business. Any transition would take time, but a well planned one can be launched much more quickly and recover from change more effectively.
How To Prevent What Happens When There Is No Succession Plan
Now that you know what happens when there is no succession plan, you can take appropriate steps to avoid those issues. Whether it be your customers, employees, or heirs, many people rely on your business thriving in your absence. Don’t forget to include a succession plan as part of your overall estate planning initiatives.