Succession planning: It’s never too early to start thinking ahead
Ross McFarlane, business finance director at Aldermore | 08:58 Wednesday 5th June 2019 | 0
Succession planning is a necessary exercise for all businesses, but it is vital for SMEs.
Small businesses rely on the specific expertise of individual staff members, without which they may struggle to maintain relationships with important clients and fail to innovate and keep up with key competitors.
Our latest Future Attitudes report shows that more than two in three leaders (70%) of the UK’s small- and medium-sized enterprises have no clear plan in place to ensure their business does not suffer when key staff leave. This is very concerning, particularly given the pivotal role SMEs play in boosting the UK’s economy.
Fail to prepare, prepare to fail
Business owners continuously face arduous and time-consuming demands when running a company. They are under significant pressure to meet the expectations of both staff and customers, meaning it’s both easy and tempting to push succession planning far down the list of priorities.
The sooner SMEs think ahead, the better, especially as unexpected events can and will happen. The long-term survival of an organisation depends on having a contingency plan in place. Succession planning is something that should be embraced, rather than avoided.
People matter most
It’s important to remember that a business is nothing without its employees. Losing a key team member is far from ideal, but planning for this scenario is vital as workforce changes are inevitable.
It’s not all bad news
According to our research, almost half of business leaders at medium-sized businesses have already planned their exit. This is certainly encouraging, and hopefully other SME owners will follow suit. Businesses need to have the tools in place to enable them to function without their current owner. Without having a solid plan in place, executives can’t guarantee the success and sustainability of the business.
It’s not easy to discuss succession. Business owners are often so absorbed in the running of a company that they put off thinking about ‘less urgent’ issues. However, by developing a well-thought-out contingency plan, SMEs can future-proof all the hard work they have put in up until now.
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