Two-part series: Part 1 of 2
Why Do You Need a Succession Plan
It’s easy to assume that succession planning means planning for the day you choose to retire. With this thought process comes the notion that you’ll deal with this “when the time comes.” The problem is that retirement isn’t the only reason for succession. Far from it. Myriad events can occur at any time that will force you to hand the reigns of your business over, and if you don’t have a succession plan in place, things can get very messy, very quickly.
4 Events That Would Require a Succession Plan
Illness can take many forms, and while thankfully, it tends to mean being sick for a couple of days and then getting back in the saddle, obviously this is not always the case.
Consider a serious illness that takes you out of the workplace for a few months, or indefinitely, or for ongoing treatment with no defined end point. Perhaps it could be that you find yourself needing an unexpected surgery that requires a long recovery period, even rehabilitation. Or perhaps your spouse, child, or a close family member becomes sick and you want to spend your time taking care of them. It’s also worth considering that after any of these experiences you may not want (or, indeed, be able) to go back to the pressures of running a business, on either a temporary or permanent basis.
Selling the Business
It may seem strange to think that selling your business is an event that you need to be prepared for in advance in case it happens, but in today’s world of ubiquitous M&A, things move fast. A knock on the door can come at any time, and if it’s an attractive proposition, you want to have your business in order the minute the knock comes.
While it’s very likely that in the event of a sale or similar, leadership would remain in the first instance, there is often a pathway to change after the first 12 to 24 months, and potential buyers or investors will want to see the plan you have in place for that. You don’t want to leave them hanging around while you scrabble to get a rushed succession plan together to show them.
Unexpected Personal Events
Since 2020 we have all learned that events can overtake life rapidly and upend everything we had planned. While we all hope we won’t need to deal with another pandemic any time soon, there are plenty of other life events that can force us to change course and thrust our business into needing a successor sooner than we had imagined.
These may include the breakup of a marriage or partnership, a catastrophic weather event, being the victim of a crime, and myriad other unanticipated events. During what will obviously be an already- stressful time, the last thing you want to have to do is put together a rushed succession plan.
It may seem like overreach thinking that changes within your employees may require a succession plan, but as more and more MSPs are bringing employees on as shareholders or business leaders, it’s critical to future proof your business with a succession plan.
Sudden departures of critical leaders can happen, as can job offers, changes in lifestyle, relocations, and so on. Having a succession plan in place will prevent these things from leaving you scrambling to fill a leadership vacuum if a critical employee leaves.
And, of course, this list is not exhaustive. Any sudden change can occur and force you or your leadership to step away from your business. It’s critical not to be caught short without a succession plan in place.
Check out our follow-up article to learn exactly what you need to get your succession plan up to speed and ready to go at any given moment.