In the dynamic realm of business advisory, succession planning represents a critical phase that can either solidify or jeopardize your client’s financial well-being and the outcome of their hard work and time. As a seasoned business advisor, you understand that guiding your clients successfully through this intricate process is complex and requires a comprehensive approach. One key element that must not be underestimated is the role of business performance in the succession equation.
The Role of Business Performance in Succession Planning
Jeff Faulkner, co-founder of ISPA, succinctly captures the essence of the connection between business performance and succession planning. He draws a compelling parallel between succession and a looming hurricane – a challenge we know is coming, though we may not fully anticipate its impact.
In this clip, Faulkner underlines a central truth: Succession planning is fundamentally rooted in achieving ongoing success. While “succession” derives from “success,” the implications go beyond semantics. The successful transition of a business through the next generation of owners, leadership, and managers is about ensuring that the momentum of the business endures across generations. This planning approach is one fundamental difference between exit planning and succession planning, as exit planning is focused more on the owner’s exit and a little bit about what is next. In contrast, succession planning is about positioning the business for success across multiple generations. The goal of a generation may be to sell or fully exit; but for planning and strategy; the goal is growth and sustainability; this way, the owner has all options at their fingertips.
A pivotal insight Faulkner offers is the anticipated dip in productivity and profitability during succession transitions, especially if those transitions are tumultuous. Having this foresight underscores the importance of having a robust performance margin – the capacity to absorb shocks and maintain the business’s success trajectory.
Your Value as a Succession Planner: Pro-actively Preparing for The Succession Hurricane
Imagine the succession process as a hurricane forming on the horizon – a force of change that demands strategic preparation. As a business advisor, you recognize this “succession hurricane” ‘s challenges. These include:
Disruptions in Productivity and Profitability:
Succession often brings uncertainty, impacting day-to-day operations and potentially leading to decreased productivity and profitability.
Leadership Changes and Decision-Making:
New leadership, whether from the next generation or an external source, can introduce different approaches and decision-making styles that need adjustment and alignment.
Maintaining Business Value and Reputation:
Ensuring the business maintains its value and reputation amidst a transition requires careful orchestration and planning.
As a succession planner whose focus is to ensure the survival and growth of the business, it’s crucial to have strategies in place that fortify its performance, enabling it to endure these challenges and continue thriving.
Building Resilience: Strengthening Business Performance
Building a solid performance margin is akin to fortifying a structure to withstand the impact of a hurricane. As a business advisor, evaluate the following to identify areas to build strategies to enhance your client’s business performance resilience:
Operational Efficiency:
Review existing processes and procedures to identify areas where operational processes can be optimized, ensuring the business operates at peak efficiency.
Mitigating Transitional Disruptions:
Create a leadership depth chart for every key position in the organization. Identify development and recruitment strategies and develop contingency plans to mitigate the impact of leadership changes and other transitional challenges.
Financial Health and Liquidity:
Evaluate financial reserves and develop a strategy to strengthen them if needed so the business can weather fluctuations in cash flow and maintain liquidity during periods of change.
Real-world success stories underscore the effectiveness of these strategies. By shoring up these critical areas, businesses can better navigate the succession storm and maintain their upward trajectory.
Strategies for Smooth Sailing: Aligning Business Performance with Succession
Creating alignment between business performance and succession planning is paramount to facilitating a seamless transition. Consider the following strategies:
Forward-thinking Risk Management:
Lead your client to embrace a proactive approach to risk management through strategic planning, identifying potential threats and opportunities that may arise during succession.
Leveraging Technology and Innovation:
Lead your clients through a review of existing and potential technological solutions and innovative practices to optimize operations and maintain a competitive edge.
Fostering a Culture of Adaptability:
Encourage a culture of continuous improvement and adaptability, ensuring the business remains agile in the face of change. Leverage 360-degree reviews, management style assessments, and other personal development and team-building tools to create awareness around communication. Develop and implement coaching programs where needed and regularly review action plans from strategic planning to adapt and change where required.
Leadership plays a pivotal role in steering the ship through transition. Many business owners and people in leadership positions have not been trained or coached on healthy communication patterns. Your ability to either personally provide coaching or leverage a coaching resource from your network can have an everlasting impact on your client’s culture and performance. Open lines of communication and collaboration between leadership and the rest of the organization foster a harmonious and productive environment.
Continuity Through Preparedness
As a business advisor, your ability to incorporate a long-term perspective into the planning process minimizes disruption, builds value, and positions your clients with multiple options for fulfilling their vision. In the intricate “chess game” of succession planning, business performance emerges as a star player. It is the bridge connecting current success to future continuity. As you guide your clients through the succession process, remember that a robust performance margin acts as a shield against turbulence, ensuring that the legacy of the business sails smoothly into the future.
The ISPA’s Certified Succession Planner™ designation provides a detailed map for further exploration of the relationship between business performance and successful succession planning. Prepare your clients for a seamless transition by focusing on their business’s performance – the bedrock upon which a lasting legacy is built.
Categories: : Business Performance