What are some ways to plan your business succession?

On Behalf of | Nov 10, 2021 | Blog, Business Succession Planning | 0 comments

There are various ways to plan who will take over your business when you decide to step down or when circumstances do not allow you to continue running your enterprise. Some business owners already have a successor in mind and build a plan for their chosen successor to take over. If you do not know who will replace you yet, you may have a different plan in mind.

Chron explains that there are two different categories of succession plans that do not deal with a chosen successor. Your plan may have a target date in mind for a successor, or you may base your plan around a change in the situation.

Target date succession

If you know in advance when you plan to retire, your succession plan may target that date to install a successor. Target date replacement plans tend to establish a process for a business to identify successor candidates. Your plan may follow your candidates through a training process that will help narrow your choices to the best-qualified candidate.

With a target date established, you can design your plan to narrow down your candidates at specific intervals. The goal is that by the time your business reaches the target date, you will have a single candidate ready to step up and take over your company.

Situational succession

A sudden health problem may force you to retire earlier than you expected. Some business owners plan for unexpected situations by crafting a situational replacement plan. With this plan, you may identify employees who have the potential to move up into a higher position in the company, usually by examining the results of internal or external training programs.

Basically, a situational plan identifies backup employees who can step in the event of an unexpected departure or a deteriorating situation. This is not a plan you will necessarily have to use. You may continue to use a target date or other succession plan and, in the event an emergency happens, your situational plan could advance key personnel or even a temporary owner to run your company until your permanent replacement is ready.