Choosing a successor to take over your business does not mean selecting someone who is exactly like you or even someone you like. It is about choosing someone who is not only well-qualified for the role, but someone who also has the vision and skills to lead your company into the future.
With so much riding on your decision, you should be careful to avoid these three classic mistakes business owners often make when naming successors. These missteps can cloud your objectivity and diminish your chosen candidate’s ability to successfully take charge of your operation.
1. Trying to clone yourself
When choosing a successor, it is often tempting to look for someone who thinks and acts just like you. But choosing a successor is not about cloning yourself. It is about finding someone to build upon what you have accomplished and take your business to the next level.
Indeed, the most qualified successor may turn out to be someone whose leadership style, skills, and business strategy are quite different from yours. Provided the two of you share the same fundamental values and vision for the company, you must not let the fact they approach things in a different way than you cloud your judgement.
After all, you should recognize that your successor’s way of doing things, while different than yours, may actually end up being a better way.
2. Not thinking about future demands
Keep in mind that your successor will not only be responsible for leading your company in today’s business environment, but tomorrow’s as well. Today’s marketplace is constantly changing, especially in terms of technology, so the skillset and strategies that work now may not work in the future. Choosing a successor is about long-term success.
Think about how you would like your company to grow and evolve, and then identify those candidates whose skills and strengths best align with your vision for the future. Do not hire a successor based solely on where your company is now, but for where you want it to be in the next 10-20 years.
3. A lack of transparency
When it comes to making a major change in your company’s leadership, it is best to maintain a sense of transparency about the process. People are resistant to change as it is—especially when it involves their employer—and if they only learn about the move after the new leadership is announced, it can hurt team morale.
Letting your employees know that succession planning is ongoing also helps build your team’s trust in the process. This is particularly true for those in senior positions who may be interested in being considered for the job. If someone feels they were kept in the dark about such a transition, they may be resentful and even consider leaving the company.
It is vital that your successor not only has your trust and support, but your team’s too. Do your best to make things as transparent as possible, because no matter how qualified your successor is, they will never make it unless they are accepted and respected by the rest of the company.
How to choose your next step
No matter how you look at it, choosing the right person to take over your business is incredibly challenging. This is especially true if your choice includes family members or close colleagues. We recommend you find a trusted, unbiased advisor to help you make your decision on what is objectively best for the company and not let emotions get in the way.
What’s more, successful business succession planning is not just about naming your replacement. It involves comprehensive updates to every major facet of your operation, including your foundational legal, financial, tax, and insurance systems.
We offer a complete spectrum of legal services for business owners and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer you a LIFT Your Life And Business Planning Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. Schedule online today.