How to Build a Successful Business Succession Plan

There may come a time when you need to step back from your business. Developing your succession plan now sets you up for success later.

When you start a business, it’s your baby. You take care of it, you watch it grow, and you help develop it into a healthy, thriving company. But for some, there comes a time to let your business go and see it flourish under a different operator. Whether that means simply stepping back from operations or outright selling the business, you need to detach yourself from the day-to-day. And to do that successfully, you need a solid succession plan.

Detach yourself for a future apart

I started my first business in high school. I had worked on it through college, and I had so much of myself invested in this company that it was pretty much the core of my identity at the time. So, when I decided to step back from being president to just owner, it was hard.

To make a smooth transition, I had to think about my future apart from the future of my company. This is why I say the first step in any succession plan is to detach yourself and realize that while you may lead the company, you yourself are not the company.

Find a successor

The next step is finding a successor. For me, it was pretty easy: The first place I looked was our director of operations, who’d been at the company the longest and was actually our first employee. He knew everything about the business, except what I knew, and when I asked him about where he saw his future, he said he’d like to be sitting where I was.

Now, I get that not everyone is going to have the perfect successor already working at their company. But just because you can’t find someone easily doesn’t mean you can’t leave. Hire a recruiter or dig a little deeper into your network–even if the search takes a year, it’s better than leaving your company with no direction.

Document for the transition

After you’ve found your person, you can’t just leave. You have to prepare them to fill your shoes. The first thing I did was take a time-based approach to listing all my tasks and responsibilities. I started with the day-to-day stuff, before documenting my weekly tasks, like doing payroll or reviewing financial statements. Then I looked at my monthly jobs, like vendor meetings, and then at my quarterly responsibilities, like filing quarterly taxes. Finally, I laid out all my once-a-year projects, like strategic planning and overall tax strategy.

Next, I went through my sent emails. This might seem a little tedious, but it’s an easy record of all the correspondence I actually engaged with, so I can see which communications should be prioritized. It also shows what I sent out myself, so my successor could see where I was prospecting for potential clients.

After going through emails, I looked back at a year on my calendar. Yes, an entire year–some things happen on an annual cycle, and if you truly want to plan an effective succession, you have to be comprehensive. Take note of meetings and what your role was, vendor calls, client conversations, or anything that can help lay out all your responsibilities. Once that was all finished, I had this big, master list of every task I was responsible for–which I shared with my successor and leadership team.

Not all your responsibilities are going to transfer directly to your successor. As a founder, I had a bunch of tasks that I’d just always taken responsibility for. Stepping back let me take on a consultant role and see that maybe finance tasks could go to my finance leader, or sales tasks could go to my sales leader. And it allowed me to create this game plan to train not only my successor but also the adjacent people taking on some new responsibilities.

Train a successor to fill your shoes

A successful succession doesn’t stop at documenting your responsibilities–there needs to be a training process for your successor. Ours was six months, but the timeline depends. Training could take three months; it could take three years. No matter how long your process is, create a training curriculum with measurable dates for when your successor will take the reigns in specific roles.

We started small, with stuff like running the weekly planning meeting or talking to outside vendors. Then week by week, month by month, we had a plan for which responsibilities he’d be assuming. I’d suggest writing the whole plan out so there’s a record of when your successor will be taking over what, then sticking to it as closely as you can.

Move forward

The final step–and this one can be really hard for some–is figuring out what to do with your time now that it’s freed up. It seems like a good problem to have, since presidents and business owners never seem to have enough time. But believe it or not, leaving yourself with nothing to do can lead to you intervening in your old business and causing problems after you’re supposed to have left.

So, before you start handing over operational duties, develop some clear passions outside the business. That might be working on your next business, it might be traveling, it might be taking up pickleball or rock climbing. Whatever it is, you’re going to need something to fill up your time so you can plan for your next chapter.

I wish I’d had a plan laid out for me when I handed over operational control of my first business, and the experience inspired a lot of what we do at my current company, Trainual, to help businesses today. If you’re trying to step back from day-to-day operations, fall is the perfect time to start making plans. The new year is right around the corner, and you can start 2024 with the first steps of your succession in place, giving you time to plan for a new future.

Source: Microsoft Start