Every business needs two plans of succession. The primary one permits the owners to retire at a time of their choosing. It usually appears after the business has matured, can take a decade or more to fully implement, and evolves over the time.
The secondary plan does not evolve. It must provide a complete operationally efficient protocol beginning on day one. It is the set of procedures and duties that kicks in in the case of emergency. An owner dies or becomes disabled perhaps comatose. A key person is no longer available.
Many small to medium sized businesses lack depth in management. The loss of the owner, even for a short time, can be catastrophic if not prepared.
The planning begins with understanding the needs and expectations of employees, customers, suppliers, bankers and even competitors.
In the case of death the immediate concerns are:
In the somewhat longer term,
A sickness or accident is similar in some ways but more difficult to manage unless there is a clear return date. The immediate things at death still matter but the longer term ones may be solved.
Steps to take beforehand:
No business can lose key people easily. If they could they would not be key. Life is variable, so do not count on things continuing as they are today. Even the most rudimentary preparation will pay huge dividends at a time when any help will be welcomed.
Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.