July 24, 2014

Small Biz Advice

You need a succession plan

"Succession planning is a process whereby an organization ensures that employees are recruited and developed to fill each key role within the company." ~ Susan Heath

Jerry Osteryoung | 4/23/2012

Our lives and businesses have all kinds of uncertainty in them. We just do not know what the next moment, day, week, or years are going to bring. However, that being said, it is so critical that we all have a plan in place for all of this uncertainty we live with every second.

So many business owners I deal with just do not have a succession plan for many reasons. Some of his or her reasons are, I just do not have time to make one, I do not know who can run my business if something happens to me, or someone will figure that out once I am gone.

Jerry Osteryoung
Jerry Osteryoung

Not having a succession plan is like playing Russian roulette with results potentially being a disaster.

I was helping a wonderful couple that has a building business. They were doing well in construction business in spite of a tough economy and I just could feel the love between the two of them even though they had been married for over 25 years. The husband had the construction license and did all of the work with jobs from the estimating to supervising the work crews. The wife was the office manager including taking care of the accounting.

I was coaching and mentoring them on their business, as they needed to put some controls on expenses and increase their marketing efforts. They always were ready to follow my suggestions so I really enjoyed working with them.

Unfortunately, the husband had a stroke and passed away completely unexpectedly. Needless to say the family was devastated by this loss as one day he was alive and fine and the next day he was dead.

When I met with the wife 6 weeks after this terrible occasion, she told me that her husband had left no will or no succession plan. She needed the business income for her family but she did not have the construction license or the experience to keep the business running. While it was very tough for her, she is studying for a general contractor's license and doing some things to keep the business going but to put it mildly, it has been so difficult for her. In fact, as she was scrambling to keep the business going that she had no time to grieve. When I asked her when she was going to be able to mourn the loss of her husband, she said keeping income coming in and bread on the table for her and her children trumped this. I did strongly encourage her to get some psychological help to insure that she got the proper help.

Clearly, in this case and so many others, if a succession plan were in place, this transition would have been so much better and less disruptive.

Now go out and make sure that you have a written succession plan, and of course a will, in place. While this forces you to think of your demise, for the people left behind having a plan of action is so helpful.

You can do this.

Go to Links Other small business advice columns from Dr. Osteryoung are here. Note: Articles older than 30 days require registration (it's quick and free).

Jerry Osteryoung is the Director of Outreach of The Jim Moran Institute for Global Entrepreneurship in the College of Business at The Florida State University; The Jim Moran Professor Emeritus of Entrepreneurship; and Professor Emeritus of Finance. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book "If You Have Employees, You Really Need This Book" is an Amazon.com bestseller. He can be reached by e-mail at jerry.osteryoung@gmail.com.

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