Benefits of Succession Planning
Who will run the business when the owner steps down?
Will the company have what it needs to continue operating successfully?
Will there be enough cash to cover company debt and taxes?
These are some of the questions that make succession planning so important. Here are just a few of the many benefits of succession planning.
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Succession planning allows business owners to identify the most qualified future leaders of the company.
Creating a succession plan allows business owners to more quickly identify positions and employees that are most critical to the company’s future success. As a business owner, it’s important to talk to your employees about their interests and future career plans early on. This way, you’ll be able to recognize internal candidates that possess the skills, values, and desire to take on an important leadership position down the road. By the same token, the succession planning process will also uncover areas within an organization that are weaker than others, so business owners will know what to focus on to secure business and financial growth.
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Succession planning protects the company from suffering in the event of a disaster.
Too often, business owners become so wrapped up with their company’s day-to-day operations that they fail to make succession planning a priority. Additionally, younger business owners do not prioritize succession planning because they believe they are too young to need one. However, without a succession plan in place, companies aren’t fully equipped to handle unforeseen circumstances, like the business owner’s death, a natural disaster, or the loss of an integral employee. With succession planning, business owners can rest assured that their company is protected with a strategy in the event of a catastrophe.
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Succession planning saves a company time and money in the long run and ensures the highest investment return.
When business owners choose to make a succession plan a priority, they’re ultimately saving both time and money. Taking the time to plan for the future of a company means that, down the road, less time will be spent on recruiting for external candidates to hold senior management positions within the company. Succession planning can also shed some light on what kinds of expenses business owners may incur once they step down from their role and what the company will need for future income. So, planning creates an intentional and important focus on leadership development and leads to a deeper bench of leadership focus.
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Succession planning eliminates confusion and gives business owners and their families peace of mind.
A key benefit of a succession plan is that it provides business owners and their families with answers to the questions that arise surrounding the future of a company and who will carry on it legacy. When business owners formally appoint a successor, they are given peace of mind that the company will remain in good hands upon their exit. Additionally, creating a plan will ensure that all debt and taxes are adequately covered at the time of exit. Hence, succession planning allows for a smooth transition between business owners and their successors.
Hopefully, after taking a look at some of the main benefits of succession planning, you have a better understanding of why it’s so crucial to plan for your company’s future. In need of some succession planning consulting? Contact Summit Advisory today and schedule a meeting to explore your options.