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Tips for a Business Succession Plan

As a business owner, you already know that planning for the future is imperative. While you are already likely doing this, you may not be planning as far into the future as you should be.

Inevitably, there will come a day that you are no longer around or capable of running your business. As older generations take on estate planning to ensure their estate is managed in the way they desire, business owners should begin a business succession plan.

Business succession planning involves many proactive steps, but chief among them is understanding current relationships for employees. Already existing fractures in colleague relationships can become inflamed upon your departure, leading to future lawsuits, especially if that departure is sudden.

Start by identifying gaps in your current business or which roles will be needed in the future. Doing so will help you create a plan that prepares current employees to take on more significant roles by implementing training now.

These steps reduce confusion and the potential of future lawsuits since you’ve provided clarity on who is being primed for what leadership role.

Be Proactive with Your Plan: Identify Critical Roles

In some cases, you will know in advance if a hard-to-replace employee will leave the company — for example, a planned retirement. Other times, a sudden employee departure will catch you off-guard. This is one reason why you need to design a plan now.

First, think about all the key roles within your company and ponder these questions:

  • What’s the day-to-day effect of this role on your company or their department?
  • If the individual in that role suddenly quits, how would that affect your operations? Have they documented their responsibilities and processes?

All leadership roles benefit from adequate talent assessment. However, it’s essential to utilize a measured approach to succession planning, especially if it’s for the first time.

The first step in the succession planning process is to identify critical roles your company should focus on as determined by their urgency and importance to business operations. These roles are your critical roles.

Many business owners forget that critical roles in succession planning go beyond leadership and management.

Critical roles also include customer support, production, and sales positions, depending on what type of organization you run. All members of the company play a crucial role in the success of your business both now and in the future.

Select Succession Candidates

Once you comprehend the ripple effects that can occur due to the departures of employees in critical roles, it’s time to select employees who could step into those roles.

Consider these questions:

  • If you wanted to hire for a specific role internally, which of your team members would be the strongest contenders for stepping into this position?
  • Would those contenders require training? If so, what type of training?

Even though the apparent replacement for a specific role might be the employee who is immediately next in line according to your organizational chart, avoid automatically discounting other potentially promising team members.

Keep your eyes open for individuals who display the skills necessary to thrive in higher positions, regardless of their current roles.

At the same time, it’s important to avoid assuming that you know your employees’ professional goals or that they want to stay with your company until their retirement. You could have some employees in mind for senior management positions. Still, you need to consider that they may not be interested in the idea when presented.

It’s essential to meet with these team members to discuss their thoughts on their professional future with your company before making your succession choices.

Remember that the best business leaders possess strong communication skills and refined interpersonal abilities, including diplomacy and empathy.

Let Your Candidates Know

In private meetings, explain to each contender that they’re being singled out for positions of increasing importance.

You should also ensure that the candidate understands that you can’t make any guarantees, as circumstances can change over time due to various scenarios encountered by either the company or the succession employees themselves.

Increase Your Professional Development Efforts

Preferably, you should already be investing in the professional development of your succession choices. Now is the time to ramp up those efforts.

Consider implementing the following:

  • Job rotation to assist candidates in gaining additional knowledge and experience outside of their current roles
  • Creating mentorship connections to boost their abilities in critical areas specific to their roles

Remember that the best business leaders possess strong communication skills and refined interpersonal abilities, including diplomacy and empathy.

Include Your Succession Plan in Your Hiring Strategies

After selecting specific team members as successors for vital positions in your business, assess any talent gaps they would leave behind if they were to move up. This will help you highlight the focus of your future recruiting efforts.

Consult with a Business Succession Attorney

You may also want to consider consulting with a business succession attorney.

These professionals are experienced succession planners who offer many creative ideas and solutions, no matter the caliber of your business. They can help you ensure that you appropriately evaluate your talent and take the right steps to plan for business succession.


Doug Griess and John Snow of Hackstaff & Snow, LLC, are top Denver business attorneys with expertise spanning various industries. Specializing in business law, litigation, intellectual property, tax law, and dispute resolution, John Snow and Doug Griess offer an in-depth understanding and knowledge of general corporate rules and regulations and are a trusted resource for business owners throughout Colorado.