Poor Succession Planning Leads to Frustration and Regret
Successful but Frustrated
I was chatting recently with the partner of a construction company at an industry event. Over the past twenty-five years, he and his two partners have built a successful business.
They have a stellar reputation for quality and safety, and they have their processes dialed in so well that they rarely fail to keep their schedule commitments. Last year was their most profitable in over a decade.
Despite this success, he’s frustrated:
“It’s not fair, all my friends are retired, and here I am with no hope of getting out in the next five years.”
The three partners are in or near their sixties and are looking to transition their business to the next generation. Like 90% of business owners, they know succession planning is important. Unfortunately, like 83% of business owners, they don’t have a formal plan in place.
They have good people working for them, but no one who jumps out as their next CEO, COO or business development “rain-maker”. The business is too reliant on the partner’s ability to cultivate relationships, win work, and build projects profitably.
To make matters worse, someone they had tapped as a potential future partner recently got recruited away by another firm.
The Clock’s Ticking
How about you? During the next 15 years close to 80 million Baby Boomers will be retiring, and the older Gen Xers are not far behind. More than 70 percent of privately owned businesses will be changing hands.
Whether you want to sell your business to another company, transition it to a family member or a group of employees, or just shut it down, now is the time to start the succession planning process.
Succession planning is a process for identifying and developing new leaders who can replace old leaders when they leave, retire or die. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available.
It’s Never Too Early
Even if you are planning on working for another 20 years, the sooner you start succession planning, the more opportunity you’ll have to fine-tune so that when you do decide to sell, retire or step back, your company is worth something.
As I wrapped up my conversation with the partner in the construction company I sensed his regret at not having the freedom to join his friends in retirement.
The next three to five years will be challenging for him, but if he and his partners can get on the same page, and get a succession plan in place, perhaps they’ll be able to develop the next generation, leave their company in good hands, and enrich their retirement accounts.
A Short Assessment
If you’re like most companies, you haven’t started succession planning. A potential first step is taking a short assessment. The assessment will ask you some pointed questions that will help you to identify the areas that you need to work on in order to lead your company to future success.
Just click yellow button, enter your details, and you’ll get instant access.