Developing a Succession Plan in Business

The owner of a small business is like the brain that functions to keep a business running smoothly. When that owner leaves, whether through retirement or a sudden circumstance such as death or illness, the business may spiral into disarray. If you have a succession plan in place that details who will take over when that owner retires, the business will have a better chance of success. According to SCORE, a small business assistance organization, succession planning ought to begin 15 years before an owner intends to retire.

• 1

  Analyze your company's business and identify the key areas and functions of the company. Your successor must be familiar with these areas when she takes over for you. In your succession plan, detail these areas and explain how the successor is to be trained in those areas.

• 2

  Research your employees and interview prospective successors. Once you identify the key areas of your business, spend time choosing potential successors. This process could take years; it should be done with patience and over time to ensure that you find candidates best suited to take over when you retire.

• 3

  Establish a transition timeline. Set a target date for when you plan on retiring or otherwise relinquishing control over company operations. Formulate an idea about how long you believe it will take for your successor to be trained and ready to lead. Implement the training gradually and relinquish control over time so that your successor earns more and more responsibility and you begin having less responsibility until the successor is ready to lead and you are ready to retire.

• 4

  Distribute notice of the plan to management and key employees. Send word to your customers that the customer service and care they have come to expect from you will continue after you are leave.