Business succession planning is important for a variety of reasons. If the founder of the company is still at the helm that person wants to see his or her company succeed well into the future. Fortunately, good planning and as well as clear criteria for how a successor will be named can make it easy to identify new leaders for any business.
Have a Plan in Place Should The Owner Depart Unexpectedly
A business owner may know when he or she wants to leave the company. However, what happens if that person suffers a heart attack or dies in a car accident? Without a clear succession plan, the company could be left with a power vacuum. Therefore, there needs to be a plan of succession in place as soon as possible that can be put into action quickly.
Business Succession Planning Gives Investors Confidence
Investors want to know that they are going to continue to get a good return on their investment. Having a succession plan in place months or years before the current CEO or top executive leaves gives investors confidence that the company will continue to be strong after the business owner steps down. When shareholders are happy, share prices stay high and it is easier to convince others to invest now and in the future.
Customers Need to Know That the Brand Is Strong
A succession plan lets customers know that they are getting the same quality product that they have been using for their entire lives. This prevents sales from plummeting and forcing the company to cut workers. The goodwill and strong brand name that the company has spent years building will remain intact if the customers still believe that they are still getting a good product at a fair price.
Pick the Right Person for the Job
Most importantly, a good succession plan ensures that the right person to lead the company will be in place when the current top executive leaves. In some cases, there may be two or more people who will share authority at the top of the corporate hierarchy. When the company is ready to start thinking about a succession plan, a business law attorney should be consulted. An attorney can help guide a company through the process and stay in compliance with any rules or regulations that need to be followed.
Successful companies have long-term plans in place to ensure its survival in a rapidly evolving business landscape. Business succession planning helps to calm investors, keep customers satisfied and prevents a power vacuum when the current leader is no longer able or willing to run the company. Therefore, it is critical that all businesses have a succession plan in place or develop one as soon as possible.