Steve Davis, CEO — Academy of Total Wealth.
One of the most crucial elements of being a successful entrepreneur is planning. A good business plan guides owners through every phase, both expected and unexpected. However, what is usually not included is succession planning.
When people hear the term “succession,” they often associate it with a negative connotation or outcome. However, like all planning in business, a long-term succession plan provides stability by identifying key players in an organization and determining what they bring to the table or can be trained to bring to the table. It allows the current leader to assess different skills in their talent pool, which can aid in successful business continuity.
I always encourage people to plan for succession because they have committed their lives and spent years working on a project to make it what it is. Why would you just give that up?
With that in mind, here are some tips for developing a succession plan that serves you and the future of your business.
Table of Contents
1. Drop your ego.
Forget the idea that no one can do the job as well as you, if not better; with the right training, they can. If your business can’t be run as well as when you ran it, you’ve never built a business – you’ve created a self-employment model that only works for your specific skill set.
As an entrepreneur and business owner, it can be easy to get attached to our egos, titles, and the power and money that come with entrepreneurship. But our ego gets hurt when those things seem to disappear. Focus on the end goal and train your mind to think long term by keeping your business goals in mind.
2. Plan in advance.
Succession planning should be done at least five to ten years in advance. This enables you to find the right person for the role. You must determine the skills required and determine how you will train selected individuals.
3. Know how to hire and learn how to train.
Now more than ever, independent leaders need to focus on their people. Leading with empathy is taking over, and in my experience it’s critical to make sure the people who run your business are happy.
When hiring at any stage, focus on retention. Intentionally recruit people to roles and prioritize building them as individuals, not just employees. When you focus on the emotional well-being of your employees and bet on their personal lives, you ensure that they return the same treatment to you and the organization.
4. Emphasize justice.
Encourage your successor in succession planning. You could pay someone to run your business in the future, but giving them a personal stake in the business gives them a sense of ownership and responsibility.
5. Focus on the three T’s: time, training and confidence.
If a successor has been found, follow the ‘three T’s’. The first is time. An essential part of a smooth handover is spending time with your replacement. This is mutually beneficial as they can gain experience by shadowing you and you will have more confidence in them when you step back.
The second part is training. Focus on building individuals personally and professionally and prioritize their training. You have to start somewhere. Be patient; remember what got you where you are today and how you can provide that for your successor. A successful succession plan requires you to challenge yourself to educate new people, train them and pass on what you know to make the business successful.
The last component is trust. Trust is a complex subject for an entrepreneur because the business is yours, but developing trust requires an introspective view. Drop your ego and have faith. The training you provide works for you; if not, the schedule will help you correct mistakes.
6. Process new perspectives.
Have creative minds with different skills. Age doesn’t matter; it’s about what people can contribute that differ from your views and skills. If you’re not careful, you can become outdated in your field. Remember that as an independent entrepreneur you don’t want a company that serves you—you want a company that serves all of the unique perspectives to promote a growing business. By doing this, you can transform from self-employed person to entrepreneur and leader. (This advice is exclusively for self-employed entrepreneurs who want to grow into a business owner.)
7. Remember that the company still needs you.
Remember, when it’s time for your successor to enter the board, you will transition into a purely advisory role. A surefire way to stay involved after retirement is to create a board. After retirement, ask yourself questions like, “Can I be the head of the board?” In the end, the company still needs you, and that’s a good thing. If you retire without a goal, your pension will quickly become obsolete.
Finally, remember to start succession planning sooner rather than later. By taking the time to plan your succession, you can ensure that your business and legacy continue to thrive even after you retire.