How to minimise your risks with long-term business planning
Building a successful business takes substantial time and effort. But according to BDO NZ, more than three-quarters of founders throw away their achievements by failing to plan for succession.
Have you considered protecting your hard work by starting to plan for the long-term now? While it may seem premature at the moment to plan for the future of your business after you have gone; having a succession plan in place could mean the difference between a failed company and a thriving one in the long haul.
Now is the time to ask yourself, ‘where do you want to see your business end up?’
The key to long-term business planning
Being aware of the business risks associated with not having a succession plan in place is the first step. Last month we introduced this concept of succession planning. It’s an often over-looked but vital part of company planning that will ensure company knowledge retention; give you the option to plan for your retirement and set goals for the company to ensure its longevity. Having a succession plan could make all the difference if a key person walked out your door by reducing your vulnerability to losing key information.
Plus, succession planning isn’t just between you and your business. As HRINZ identifies, if you’re a public company, having a succession plan in place will boost investor confidence by ensuring that in the event of some catastrophe, the continuance of the business is assured.
Understanding risk management for company knowledge
Often when we talk about risk management, we are referring to financial risk management. But have you considered the process of reducing risk surrounding company knowledge? While not all risk is considered bad, understanding your risks can help you improve your chance of realising your objectives. Having a succession plan is like having a risk strategy for your company knowledge and processes.
Capturing company knowledge – particularly tacit knowledge – should be one of the first steps in your succession planning process. If you’ve built up a team that is effective at meeting objectives, learn their systems and processes. By capturing this information, you can replicate these systems and processes for future use. It could also mean potential for franchising or expanding your business.
Meeting your organisational needs
Once you’ve captured company knowledge, you will better understand if your entire team is on the same page. Is your organisation all headed in the same direction? When it comes to succession planning, knowing what your company goals and objectives are will ensure you’re taking the right steps to get there. It will also help you identify next generation management goals.
To ensure your entire team is taking the right steps, you can develop a collective vision and include this in your succession plan.
Get buy-in from the whole team to create a unique plan
Every team will have a unique approach to creating a succession plan. The most important part is getting buy-in from the whole team.
We follow these crucial steps toward succession planning in a process we’ve developed called PIPE (Profit Improvement through Performance Enhancement). By using this process, we can capture your unique company knowledge in order to replicate these systems or processes.
Whether you’re planning to retire, franchise your business or find yourself ready to minimise your risks by creating a plan now, we can use PIPE to kickstart the planning process.
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.