Business Succession Planning Made Simple

by Chris Way

For many business owners, business planning is a dreadful thought. Ranking somewhere behind emergency root canal on the business owner favorite things charts, business planning is frequently, and unfortunately, neglected and postponed. Within the planning world, business succession planning somehow ranks even lower. When succession planning takes place, it’s often spurred by seeing someone’s lack of succession planning go badly than any proactive desire to make succession go well.

This shouldn’t be the case. Business succession planning is a vital piece of your business’ success, both in the future AND today. Business succession planning IS planning for business success.

Business Succession Planning Helps Your Business Today

We tend to think of succession planning as doom and gloom, mapping out a future without you. But business succession planning isn’t only about planning for your permanent departure; it’s a plan for temporary absence. Succession planning is about creating a structure for others to understand and do your job.

This provides immediate benefits and long term ones. Immediately, it frees you up to do more because you’ve created structures that allow and teach others to take work off your plate. You can apply that newly found free time in a variety of positive ways including: (1) increased focus on executive strategy and less on operations; (2) developing a brain child into a new product, service, or line of business; or (3) ticking a vacation off your bucket list.

When you create the tools for others to step in and help, you help your business now. These same tools also help your business in the long term, so that if something unplanned happens, your business isn’t thrown into a tailspin. The right people already know what to do and have the authority to do it.

The Building Blocks of Business Succession Planning

Succession planning has two key components: Legal and Operational.

Business Succession Planning: The Legal Pieces

The legal component focuses on making sure that the right people have the authority needed to manage the organization. It creates the pathways that transfer authority and allow your successors to act on behalf of the company in designated ways that you have chosen, rather than someone else. The legal elements of your succession plan may involve your company’s operating agreement, emergency bylaws, modifications to an employment agreement or job description, bank signature cards, buy/sell agreements, or any number of other tools. The specific tool needed depends on the desired goal and the parties involved.

Business Succession Planning: The Operational Pieces

The operational component focuses on making sure that those right people you’ve identified in the legal component know what they’re supposed to do when they exercise the authority you’ve given them. To do this you need to think about what’s involved in your job and teach them how to do it.  Teaching them can take several forms. You can teach your team in the moment as a particular topic comes up. You can hold specific sessions on certain topics. You can informally train on certain topics based on a timing that you feel good about. You can write everything down in a big reference manual. There’s no single method. Each of these can carry its own pros and cons.

Way Law’s Simple Succession Planning System: Focus on Jobs

One of the things that can make business succession planning feel daunting, and cause procrastination, is that the task can feel huge. Many business owners and top-level management wear many hats. Trying to know where legal authority needs to lie and what operational knowledge one needs is challenging to try to organize and write down. I suggest a different approach. Instead of trying to write the perfect job description of what you do, a technical manual on how you do it, and the legal instruments that would allow someone else to take over for you, think through your job functions based on the time period related to them.

  1. Daily Jobs- Think about all of things you do daily. Write them down.
  2. Weekly Jobs- Think about all the things you do on a weekly basis. These are things you must give attention to once or a few times a week, but not every day. Write them down.
  3. Monthly Jobs- Same thing. We’re figuring out what you do monthly. We’re only interested here in the things that you do about once a month, or maybe a few times a month. But not those that you do every week.
  4. Quarterly Jobs- I think you’re getting the pattern. What things happen or need your attention one or handful of times over the course of the calendar quarter? Write them down.
  5. Yearly Jobs- Finally, we turn to those things you do once or a few times a year. Write them down.

Helpful Hints to Boost Your Planning

  1. It can be hard to think of what you do within a given period. You like do seemingly countless things for your business. If you find yourself stuck, peek at your calendar and email. The two should give you a pretty good overview of the kinds of things need your daily attention. You may see emails with clients every day, but only one per month from a particular consultant. That will tell you that client service, or particular kinds of client service, is a Daily Job, while working with that consultant might be a Monthly Job.
  2. Don’t worry about writing out how you do the job as you make those Job lists. Focus on the “what’s” first. Once you have the “what” of your job, you can now turn to the “how”. The “how” is whatever information you feel is helpful to doing the job. It could be a set of instructions on a process, a technique, a key person to talk to, or anything else you find useful.
  3. Writing out the Jobs can help you see gaps and issues. Maybe something hasn’t been accounted for. Maybe there’s too much on your plate. Your operational planning can tell you.
  4. Once you know the Jobs involved in your role (the Operational components), it will be easier to see where the authority to do those jobs (the Legal components) needs to be added. Now your lawyer can step in and help create the instruments that add authority either immediately, or as a contingency, to do these Jobs.
  5. It takes as long as it takes. You don’t need to finish this process in a weekend. Take your time. The point of this exercise is to break the Jobs down into smaller, more manageable bites. This way you can attack when you have free moments without the experience becoming tedious or overwhelming. Working on your succession planning Jobs might be the perfect Weekly Job!

Final Thoughts

Once your succession planning process is up and running, don’t limit it to your top management. Engage your whole team. Every member of your team contributes to the company. They provide valuable services and hold important institutional knowledge (we’re going to give preserving institutional knowledge it’s own blog article in the future; stay tuned). Beyond just you, make sure that the Legal and Operational pieces are there to continue those Daily, Weekly, Monthly Jobs that your team performs as well. This planning positions your business not only for succession, but for success. And isn’t that what we’re after in the first place.