In Australia, small businesses account for 97 percent of all businesses. These kind of businesses are a vital part of our economy and need to be valued and handled with care. Due to the high failure rate of small businesses, the Australian Securities and Investments Commission released a report intended to investigate corporate liquidation. This report discovered that from 2011 – 2012 44 percent of small businesses suffered poor strategic management, 40 percent had insufficient cash flow or high cash use and 33 percent suffered from trading losses.
As the report mentioned, many companies were subject to poor strategic management. This is shown through the high failure rate of inadequate small business succession planning models which in turn cause the downfall of numerous businesses nationwide.
Now you can probably see why it’s really important to have a good succession plan. A succession plan is not just about hoping that your successor will be suitable to take over your business. It’s about making sure that they have the determination and commitment to direct the business and have the skills to develop it. When you’ve acquired the perfect successor make sure to immediately begin grooming him or her for the position.
While choosing the best person for the job can prove to be a challenging, the transition to new leadership is sometimes thought to be even harder. Keep in mind that the transition of your business won’t happen overnight and keep in mind that a transition period is advisable, as this will ensure your business continues to run smoothly. By revealing your framework for change to your employees, you are able to show them that you care, as you are also dedicating time to make their transition as comfortable as possible.
When considering a succession plan it is always important to seek advice, ideally from a company that specialises in succession planning for small businesses. You might think that you are the expert on your business, and you may very well be, however, this doesn’t mean that you know all there is to know about passing it on. You should also be ready to disclose all the details about the current state of your business and what you envision for the future of your company.
Whether you intend to sell your company or want to pass it onto the next generation, it’s vital to have a succession plan. A solid plan ensures that your business will workout in the long run and promises sufficient retirement funds, as well as guaranteeing that the business that you’ve created continues to thrive.