Choosing the person to take over your business after you exit isn't about selecting someone who's exactly like you or even selecting someone you like. The most important thing is that you choose someone who's not only well-qualified for the role, but who also has the vision and skills to lead your company into the future.
With so much riding on your decision, you should be careful to avoid these three common mistakes business owners often make when naming successors. Such missteps can cloud your objectivity and diminish your chosen candidate's ability to effectively take control of your company.
1. Attempting To Clone Yourself
When selecting your successor, it can be tempting to look for someone who thinks and acts just like you. But choosing a successor isn't about cloning yourself—it's about finding someone to build upon what you've already accomplished and take your business to the next level.
Indeed, the most qualified successor may turn out to be someone whose leadership style, skills, and business strategy are entirely different from yours. As long as the two of you share the same fundamental values and vision for the company, you shouldn't let the fact he or she manages things in a different way cloud your judgment.
Ultimately, you may realize that your successor's way of doing things, while different than yours, is actually more effective.
2. Not Considering The Future
Remember, your successor will not only be responsible for leading your company in today's business environment, but tomorrow's as well. Today's marketplace is constantly changing, especially when it comes to technology, so the skill set and business strategies that work now may not work in the future. Indeed, choosing a successor is about ensuring your company's long-term success.
Think about how you'd like your company to grow and evolve, and then identify those candidates whose skills and strengths best align with your vision for the future. Don't hire a successor based solely on where your company is now, but on where you want the company to be in the next 10 to 20 years.
3. A Lack Of Transparency
When it comes to making a major change in your company's leadership, it's best to be transparent about the process. People are often resistant to change—especially when it involves their employer—and if your team only learns about the move when new leadership is announced, it could hurt their morale.
Letting your team know that succession planning is ongoing also helps build your team's trust in the process. This is particularly true for those in senior positions who may be interested in being considered for the job. If someone feels they were kept in the dark about a leadership transition, he or she may be resentful and even consider leaving.
In the end, it's crucial that your successor not only has your trust and support but your team's trust and support, too. To this end, do your best to make things as transparent as possible, because no matter how qualified your successor is, they'll never make it unless they're accepted and respected by the rest of your team.
Enlist Our Support
No matter how you look at it, choosing the right person to take over your business can be incredibly challenging. This is especially true if your choice includes family members or close colleagues. As your Family Business Lawyer™, we serve as your trusted, unbiased advisor to help you make your decision on what's objectively best for the company and not let emotions get in the way.
What's more, effective succession planning isn't just about naming your replacement—it involves every facet of your operation, and planning for your exit is just as important as any other planning you do for your business, if not more so. As your Family Business Lawyer™, we can guide you through the entire process and help ensure the business legacy you worked so hard to build will continue to thrive no matter who is running the show. Contact us today to get started.
We offer a complete spectrum of legal services for business owners and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer you a LIFT Your Life And Business Planning Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. Schedule online today.