First step in succession
Succession planning has been getting a lot of publicity, with a whole bunch of experts giving advice. In my view, it is one thing to say “you need a plan” or “you need to be able to delegate responsibility and accountability”, and quite another to come up with an explanation of how that might be achieved.
Of course, business owners don’t generally want the world to know that they are thinking about succession or sale of their business, and need to retain control for some period. Giving up control is hard, but is the end game in succession.
So really, succession planning for SME’s might be about working out a series of steps that the business owner can feel comfortable with, where elements of company control are gradually passed over. Seen in this light, the process might be a whole lot less threatening.
Many SME’s have a single owner/director, or have several owner/directors that foundered the company and have grown it over the years. Sometimes the accountant or lawyer is the advisor or director, as they have been involved from the start. A succession plan s about change, and for me, this is the starting point.
Independent directors with experience in succession may well be a good start. If this is a step to far, consider an Advisory Board, who have a different legal standing but can be genuine advisors without having actual company votes. Independent directors or Advisory Board members should be sought for their ability to give advice relating to future company direction and succession, rather than maintaining the status quo.
In my experience, many business owners do not like new directors or advisors coming into their company and suggesting changes. Often newcomers will see things from a different perspective, so what seems perfectly obvious to the owner is clear as mud to the newcomer. The “succession” advisor will often ask for a policy or process to be documented to make the matter very clear, but the owner will see this as a waste of time, or an unnecessary loss of operational flexibility. However, this is exactly the type of matter that must be resolved in most succession processes. The conflict is not a matter of not understanding the business, but one of changing control.
If this step can be taken, with processes clear and documented, the next steps can be easier.