The Fundamentals of Succession Planning for Your Service-Based Business

YouTube

Nov 11

Learn about how this type of planning is crucial for emergency-proofing your small business.

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Have you ever worried about what would happen to your business if something happened to you? Or maybe you wanna take a guilt-free vacation or an extended leave, but the idea of delegation or hiring feels so daunting?

This could be because most of the business activities day to day happen straight from your memory.

All small business owners need to be implementing a succession plan today. This will cover your ass when planning for the unexpected and strengthening the operational foundations.

What Is Succession Planning?

Your key takeaways:

What is succession planning?
How we can look at it from the context of a small service-based business or solopreneurship

It is the process of identifying strategies for delegating roles and responsibilities in the business. It also allows the business owner to communicate their intentions for the future if their role were to change or they were to depart the business completely.

How does this look in the context of a small service-based business or solopreneurship? This could be grooming a team member to take over more of your responsibilities, which is a delegation strategy. It could be planning for yourself or a team member to take a vacation, whether long or short, or it could be parental leave or leaving to caregive a loved one.

Then, there are voluntary exit strategies. Exit strategies are another way to think about succession planning, which can look like considering selling your business someday or possibly buying another business in both cases that would change what your role would likely look like in the future of that scenario.

Maybe you're not too far off from considering retirement and want to consider handing off the business to a family member or a team member. In all of those scenarios, that's a lot of information gathering and knowledge sharing.

Lastly, we can't forget about emergency planning. This comes back to the question at the top of the video of what happens to my business if something happens to me. That could be a serious illness or injury, a need to drop everything and go care for a loved one.

Considering the elephant in the room that we don't really wanna talk about, but we gotta think about, it is death. Thinking about, “Am I the only one that knows anything about the business?”

Is there any way to access any of the sensitive information like passwords or know what is actually going on in the business? What actions would need to be addressed if I wasn't available, even if I just needed an email sent to clients letting them know that I'm not available? Does anybody even know how to step in and do that?

Now, if you're saying to yourself:

“None of this feels very relevant to me.”

“There's not a whole lot going on in my business.”

“If something happens to me, then the business just ends.”

I got some news for you.

Your business doesn't just evaporate when you're not around anymore. Your business is a machine you pulled together from an idea to what it is today, delivering services to your clients and receiving money.

I guarantee there's at least a few things going on there that you know would need to be dismantled in the case of having to close down your business.

That could be licenses, insurance, taxes, all the subscriptions to platforms that run your business, communicating with the team members that you're paying, and the clients that are paying you. All of these different things are things that need to be addressed.

Does anybody know how to do that? Is that documented anywhere? Have you identified anyone that would do that for you?

Why Succession Planning Is Important

Stop doing all of the things

If you're like many of my clients or me, you find yourself often busy with the day-to-day activities of the business. That's supporting your team, serving your clients, maybe you're doing marketing, or doing your own bookkeeping.

You don't really have a lot of time to take a step back, look strategically, take the 30,000-foot view, and see the potential risks coming ahead - much less planning for them.

Succession planning is a very direct and focused exercise that allows you to organize and plan for specific scenarios. These scenarios are potentially addressing the most critical risks in your business.

Unburden your mind

The mind is designed for thinking, not for remembering.

Trying to remember passwords, appointments, and how to do x, y, and z tasks. It's not really an effective use of your brain space and energy. The type of succession planning I specifically do with my clients unburdens them of all that.

It documents everything down.

It's a true gift to others

Going back to emergency planning. If somebody has to step in your shoes at a moment's notice, you want them to have the guidance to take action. You don't wanna leave them hanging and wondering. You don’t want them to go through the painstaking activities of contacting every business's customer service and trying to prove to them that they're an authorized representative that can act on the business's behalf.

That sounds like a huge pain in the ass. Depending on the circumstance of why they're taking that action on your behalf, there could be a lot of other things at play that is overwhelming them.

3 basic steps of succession planning

Plan and Organize

Think about some of the scenarios we talked about here. What resonates for you? If anything? I would start with, “What happens to my business if something happens to me?” Thinking about what that would look like. Then organize what needs to come together to ensure that action can be taken to mitigate that risk.

2. Access and Awareness

The next point is access and awareness. Is that documentation and information you're gathering accessible to the person or persons that need to take action? Then awareness - Is that person or persons aware of what they're supposed to do, how they're supposed to do it and is the information accessible to them?

3. Accountability

Lastly, accountability. This type of planning is not sexy. It's not top of the list for nearly anyone. There's a strong tendency to kick the can down the road on getting it fully done. I recommend having an accountability partner in place. Whether that's a business bestie, maybe a spouse, or even hiring someone like me who does this for a living, who could provide you the guidance, templates, and structure to directly get it done.

Well, there you have it. The fundamentals of succession planning for small service-based businesses.

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