For this week’s #BusinessTipTuesday we will be recognizing Family History Month, which is celebrated in August. The importance of this month lies within ancestry and genealogy. To understand your family’s lineage you are able to recognize who is a part of your family and how everyone is related. As well, it can also divulge important medical information that you may not have been aware of. Another part of family history would be to have a better understanding for individual family member’s lives, like occupation, residence, likes/dislikes and more. However, when we talk family history in business, one idea stands out as the most important and that would be succession planning.
Succession planning can be defined as the process by which potential successors are identified and developed to take on key positions, such as leadership roles, upon the retirement, incapacitation, or death of the current person holding the position. Having a succession plan is key to an effective transition from one leader to the next. However, it is common for small businesses to not have a plan in place. Check out these two scenarios to see what business is doing it right!
Grandma Jane’s Restaurant has been in business for 3 generations and it is time to retire for current President Jackie. When the restaurant was created by Scott back in 1905, he ran it until he became too old in which he passed it along to his son Joe, after years of working in the business and training Joe to take over. In 1975, Joe passed away tragically which left for a disruption in the year training plan in which his daughter Jackie was doing until she was going to take over the company in 1976. Although, Jackie had to take over the business sooner, the plan was still in place and the next president was designated. Now Jackie knows that she wants to retire so she has planned for her daughter to take on the role of President by the end of 2018, after 3 months of training and 6 months of shared presidential duties.
Parker Insurance started back in 1968 when Jim decided to open his own business. He employed his son, Steve, and daughter, Rachel, upon their respective graduations and the two children have been working under their dad for over 25 years now. Unfortunately, Jim suffered from a stroke which had left him unable to work and not in the right state of mind to make decisions. Although, he had yet to decide who to leave the business to; both his children are hard workers and have great leadership qualities so the decision has been a tough one to make. Now, Steve and Rachel are fighting over who will be the next President and they are causing trouble for the business.
Which business has the right plan in order? If you guessed A, then you are correct! The succession plan for Grandma Jane’s Restaurant set up by current President Jackie allows for a set time for the next president to be trained, guided, and then able to take over the business. Does your business need help with a succession plan? Here are just a few things to think of when creating one!
- Choose a Successor:When you are making the decision as to who will take over the business next, make sure it is the right one! Look at the qualities of each applicant and make sure they fit for the job and weigh all your options before settling on a decision. Maybe give a few potential successors more leadership roles to see how they handle them before deciding.
- Train the New Leader:While the next leader may already have experience in the business for many years, it is important that they are trained properly in the specific leadership role they will be given. By providing a training program to the new leader they will be more equipped to take on the new position.
- Set a Timed Exit: Although, as the current owner you may not want to leave just yet, it is vital that you set a scheduled date in which you leave and the next person takes over. It is extremely important to not hang around and micromanage everything the next leader does, as this causes frustration to them and confusion to the employees. It is not a good start for the new leader.
Hopefully, these ideas are helpful for when you are creating a succession plan of your own. These are all things that need to be thought about and accounted for, especially for family businesses as emotions are often involved. The University of Scranton Small Business Development Center is here to guide your family business through times of transition, so please reach out to use if a succession plan is something you need help with! Visit www.scrantonsbdc.comfor more information.
The University of Scranton
Small Business Development Center
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Artwork adapted from freepik.com