The Successful Succession Plan: Lining up Your Next Gen Leaders

The “why” behind the decision to own a small business is personal, though typically one or more reasons fall into a few common categories: financial independence, professional stability, flexibility with time or it’s a passion pursuit. Whatever the drivers, everyone - by design or circumstance - is naturally building equity in something to one day pass on. The question is: to whom?

Identifying the leaders in your organization or hiring them is important today and for the long term. As much as some of us believe we can or have to do it all ourselves, the hard truth is without a strong team, you’ve got a weakened business - even if you’re making money. Who will be your successor?

Let’s look at the options. You can develop the skill sets of a current employee for eventual ownership. This path can have a huge impact on your business now. A general manager, for example, allows you to get out of working in your business, and instead, frees up your time to work on your business. If you look around and don’t see any candidates among your current team, you’re not alone. But it may not be their fault.

The Harvard Business Review says that “many organizations haven’t figured out how to fully develop their prospective leaders. That limits these people’s advancement and eventually their engagement and, ultimately, leads to turnover.”

Are Leaders Born or Made?

Psychology Today says made, by a two-to-one ratio. Provide the right training through mentorship and coaching. Look for ways to expand responsibilities that define a career path for those who want it. Seek input and encourage problem-solving. Also consider allowing the right person to buy into the business.

Need to hire? Avoid settling for a warm body. Hiring talent is just as important as buying or leasing the right equipment. If you find yourself pouring over features on a product sheet but haphazardly interviewing people to superficially gauge their best qualities, it might be time to adjust your perspective.

Look for important “softer” skills. Harvard Business Review says these include curiosity, collaboration and influence, and an orientation to results, among others.

If you’re looking to next-generation family members, there are other considerations. It’s best if they have “skin in the game” early on and have spent time working in the business. Some honest, heart-to-hearts may also be in order, so no one is operating under false assumptions about who loves the business!

In the end, if you need to sell to an outsider, your company’s leaders are likely to be a consideration. Prospective buyers will be evaluating your team with a critical eye, attaching a value to your human assets.

Business ownership is challenging but ultimately, highly rewarding for those who begin planning their exit as soon as they’re handed the keys. So, go grow your leaders!

What tools are you using to define and develop your future leaders? Drop me a note at kevinc@alliancefranchisebrands.com.