How to Find a Successor for Your Small BusinessYou made your business what it is today. But you also need to plan for who will lead it tomorrow.
You’ve spent years building up your business. But what happens when it’s time for you to step down. Succession isn’t only a concern for royalty; it can make or break a company.
“Usually, when a business is small, you have an entrepreneur who runs and controls everything,” says Chuck Gumbert, founder and CEO of the Tomcat Group in Wichita, which coaches and mentors owners of small- and medium-sized companies. While a strong leader may propel a firm to success, he or she can also cause the firm’s long-term future to be hazy: “It somewhat overshadows any protégé who is coming up the ranks,” Gumbert observes.
If you want to make sure your business can go the distance — beyond even the point when you personally can lead it — consider this expert advice:
- Start putting plans in place today. Yes, even if you have no current plans to retire. “Make a succession plan part of your overall strategy and vision,” Gumbert said. “You need to determine what will happen to the company should anything happen to you, even if, heaven forbid, it happened tomorrow.”
- Assess your internal talent. There’s no easier way to find a successor than to make one, by nurturing a promising staffer or family member. Is there anyone who’s especially bright, skilled and dedicated on your team? “Take that person and put him under your wing,” Gumbert said. “Give him or her the education, training and experience to take on the leadership role.” The sooner you can start, the better, since it can take a few years.
- Take good care of your heir apparent. You don’t have to tell him you plan to eventually hand over the reins to him, but you do have to make him always feel, in Gumbert’s words, “wanted, listened to, rewarded and appreciated.” It’s even more important to do so if you don’t intend to step down for some time. Remember, the more you invest in your would-be successor, the more desirable he may be to other employers. And “if he decides to leave, it’s over,” Gumbert said.
- Cross-train employees in key positions. “Do it two or even three levels down in your organization,” Gumbert said. If your protégé does suddenly need to take the helm, it will create ripples that can reach into the lower ranks. Cross-training will help others quickly step in to fill that void.
- Keep a close eye on the competition. If you can’t identify an heir apparent within your company, know who the star employees are on your rivals’ teams. In a pinch, you may need to hire one of them away. (This can be true even if your plan is to sell your business. “A company that’s lacking a clear leader is much less attractive to potential buyers,” Gumbert warned.)
- Stay active within your community’s organizations. Whether it’s a volunteer group, a religious group or an institution like the Rotary Club, be engaged and mingle. Gumbert said it’s one of the best ways to make connections and find promising candidates with the kind of business experience you may need.
- Find a mentor or hire a business coach. Seek out someone who has helped a business — either her own or someone else’s — get through a transition in leadership. She can help you with the ins and outs, based on personal experience and hindsight.
- Have the number of a reputable interim-management company handy. If all else fails, this type of firm (you can find one through colleagues’ recommendations, or by doing an internet search and checking references) can be an indispensable fallback. “They’ll come in and provide stopgap leadership until a permanent replacement can be found,” Gumbert said. “In some cases, they will also launch a search for a successor and help recruit the right person,” he adds.
An added advantage: Because of their relative objectivity, an interim management firm also can take stock of the company’s operations as a whole, and give advice on how to make it even more efficient. That way it won’t just survive, but thrive, now and into the future.