SME specialist blogger Steve Grice says even small companies should have clearly defined succession planning in place.
All businesses should have a strategy – a medium to long term plan of where they are going. All large and medium sized businesses will have this – but most small businesses do not. At best, there is a kind of fuzzy idea of a plan the head of the owner.
I’m not talking here about a a business plan. This is the short term planning document that all businesses should have that says what they are going to achieve over the next year or two. What I’m writing about here is the longer term strategy of where you want the business to be in five or ten years.
Often this is a difficult question to answer precisely, and the answer will need to have some built in wiggle room to allow for contingencies. However, when you are thinking about where you want the business to be in 5-10 years, you’ll need to think about some of the following:
* Do I still want to be running the business then?
* Do I want to sell, or retain control?
* What size will the business be by that time?
* How will my customers have changed?
* Will technological change have an impact?
* What will the financials look like?
Note again, that this is thinking on a longer timescale than the business plan. The most fundamental questions are probably the ones that are most personal – the top two in the list. It is important to say that there is no right answer here – what suits you will depend on your circumstances. It may be the case that you want to sell the business within five years and retire aged 30. Or you may want to continue working in the business until you’re 90. Neither answer is right or wrong. What is not so good is not having the understanding of what you want from the business.
There are lots of professionals out there to help you implement your strategy (accountants are usually a good place to start), but before you contact any of them, take some time to really think through what you want from your business. Is it simply a cash-generating machine to pay your wages? Or is it something you absolutely love doing and couldn’t imagine giving up? Do you have children that want to come into the business? Is the business still going to be around in a few years time, or will market changes have made it obsolete?
Much of this falls under the heading of succession planning, which is largely about personal motivation and realising the long-term value in what you have created. To do this, you need to consider how this is going to be achieved. For example, can you achieve your personal goals if your business is suffering from long, slow decline? If not, then you will need to look at the nature of the business, and this is where personal and business motivation go hand-in-hand.
Steve Grice is a Business Development Manager for the Black Country Reinvestment Society – a non-profit lender to SMEs. His views are entirely his own and are not necessarily representative of his company.