Just one phone call can suddenly throw your business into crisis
For example: your business partner suddenly calls to tell you they will be away from work indefinitely due to a serious health crisis. Because you rely on them to manage all the customer relationships in your business you now have a major problem.
As you hang up the phone, you start to realise how, after all your years of hard work to build a successful company, your business has become reliant on a select group of people. What is more worrying still is that you haven’t created a strategy to cope when one of your key people suddenly becomes unavailable. Where do you go next?
Like many businesses in New Zealand, every person on the team has valuable company knowledge
Losing a key person could be detrimental if a plan isn’t in place to ensure the longevity of the business. While it’s hard to predict the future, building a succession plan could mean years of added benefits – particularly when retirement becomes a feasible option. Is your current business ready for its future?
Succession planning: ensuring that if you leave, your business will stay
The New Zealand Ministry of business, innovation and employment explains succession planning as “the process of ensuring your business is successful without you”. Change is inevitable and as an owner you may enjoy the freedom to think about retirement one day or taking on a more passive role. “Succession planning is important because businesses that are not reliant on one person or a departing owner’s knowledge, reputation and industry contacts are generally better equipped for sale and to deal with inevitable changes,” writes the Ministry in this document.
A mentality still exists in today’s business world that employees can be easily replaced or that they simply won’t leave at all
But, as we mentioned before, in the case of a sudden health crisis, having a plan in place will make dealing with the situation easier to handle.
TalentQuest revealed some surprising statistics in its blog, reporting that an encouraging 81% of respondents have a succession plan in place. However many later revealed these plans were not formally documented but said there had been discussions about the possibility of key employees leaving.
Why having a succession plan is crucial
As we highlighted earlier, one of the key reasons for a succession plan is to reduce your business’s vulnerability to losing key information along with key staff. With turnover rates higher than ever, it’s surprising to report that 36% of companies have a succession plan in place to promote internally. If those positions become vacant, having captured company knowledge will reduce your induction time and save you money in recouping valuable time to relearn the needed skill set.
Thinking long-term also allows you the freedom to choose the legacy you want to leave behind.
Plus, it will allow you to set goals for the business and directions for future growth. Even if you step down from a management position, your business may be responsible for a substantial part of your income after retirement. Having a say prior to leaving will ensure financial longevity. Finally, in the event of an unexpected incident, you don’t want to leave your family and friends in chaos without business protection.
Planning for the long-term, today
One of the key factors in creating a succession plan is capturing the day-to-day information that is inherent to current employees. Think about one of your business partners: do you know who they communicate with on a daily basis or how they access their emails? How did they upload that article on your website last week? All of these answers contribute to the successful outcome of your business.
We’ve developed a system that focuses on capturing vital information by analysing the responsibilities of each individual employee. The process called PIPE (Profit Improvement through Performance Enhancement) breaks down an employee’s time into segments to give a better understanding of what they do, why they do it, and how long it takes.
If you’re ready to start creating a “business succession plan”…
Give us a call on 09-579-8566 or email me.
We’d be happy to give you a free introduction to PIPE, either face-to-face or on Skype.