Entrepreneurs are thriving in every industry, large or small. South Africans have found themselves forced to start their own businesses or work on gigs, only to be forced to employ others. Much of this can be attributed to Covid-19, as layoffs and suspensions of employment have prompted many people to change their careers.
Aside from those who started their businesses during Covid-19, there are those who have been in business for decades. Is a succession plan necessary regardless of how long you’ve been in business? It is important for you if you want to leave your heirs a working business that will continue to operate even after your death.
A lack of a succession plan can jeopardize your company’s ability to continue operating as soon as you die or become ill. The agony of watching your business fail is one of the most torturous experiences that any entrepreneur can go through.
Why is a succession plan so important to entrepreneurs? Before we answer this question, let us define a succession plan.
A succession plan is the selection and training of a group of current and future employees to replace the company’s current leaders. A succession plan’s goal is to ensure that key roles in a company are filled by deserving talent when existing talent retires or dies.
Given that a succession plan entails selecting and training individuals to be worthy leaders of a company in the future, let us understand why succession is important.
The concept of succession has evolved significantly over time, as evidenced by monarchs who still rule today. Kings and Queens have always been groomed to be future leaders, as are their children, and the cycle continues.
Because capitalism promotes competition, your business may not last as long as the British monarchy; hence, you should implement a succession plan. The Oppenheimers have sold their stake in De Beers Group in recent years, but they have always had a succession plan in place.
The sale of the Oppenheimers’ stake in a company founded by Ernest Oppenheimer does not imply that the Oppenheimers have failed. The Oppenheimers now own one of Africa’s most prominent family offices.
Their stake in De Beers Group may have lasted nearly a century, but they continue to invest in a variety of companies around the world. The Oppenheimers were able to build wealth and sustain it over time by implementing a succession plan.
If you want your business to continue to grow after you are gone, you should have a succession plan in place. Heirs can venture into other areas in the future because times change and so do business opportunities.
We can see from the above paragraphs that the succession plan exists to preserve and increase wealth over time. As an entrepreneur or the owner of a large corporation, you now understand the importance of having a succession plan. After all, why would you own a business if you don’t consider the next generation?
Steps must be included in a succession plan. As a result, when planning, you must take the following steps:
Succession planning is important for a variety of reasons, some of which are more future-oriented than others. When dealing with succession, as a leader you will be confronted with a difficult subject. You are not only promoting your own interest in the company, but also the interests of many other stakeholders in the company.
To protect the company from future business risks and other issues, a succession plan is developed to:
If a company has a succession plan in place for those in the C – suite, it will be able to operate with someone who understands the company and the industry in which it operates. Having such talent will help the business maintain its profitability and carry out projects that were previously carried out by former managers.
A succession plan is something that every business owner should have, and it is a critical component when it comes to sustaining and growing wealth. If you intend to give your heirs powers, a succession plan can be an excellent estate planning tool.
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