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Guide

Succession Planning: Tips for Selecting and Onboarding Your Successor

Business owners who are planning their company exit must begin the process of business succession planning. Get tips from Fresh Insights.

As we discussed in a recent article, it’s critical that owners who are planning to exit their company at some time in the future begin the process of business succession planning sooner rather than later. One of the first steps involved in business succession planning is deciding who will take over as the leader of your company after you’re gone.
 
The future leader of your business could be a family member, an existing employee, or you may have to go in search of your successor, says Phillip Hamman, CFA CFP®, managing director with Linscomb & Williams, an affiliate of Cadence Bank. “Either way, it’s critical to begin the process of identifying your company’s future leader and start preparing him or her for this responsibility long before your planned exit from the business.”

 

 

 

 

Common Leadership Characteristics

 There are a few characteristics that almost all successful business owners share. These include natural leadership ability, strong communication and organizational skills, the ability to multi-task, and a big-picture vision for the future of the company that other employees and stakeholders can get behind.
 
“Your successor needs to buy into your corporate culture and vision first,” Hamman stresses. “This part is essential to the entire process. It’s likely your successor will want some flexibility as they create their own path, but you’ll want to be very comfortable that basic values are strongly aligned before letting go. Starting early will provide time to identify several potential candidates and observe who your employees start looking to and treating as your future leader.”
 
Ideally, you will identify and tap your business successor at least two years before your planned exit, if not sooner. “This will enable you to onboard your successor in stages,” says Hamman. “During this time, your relationship with your successor should begin to shift from being a boss to being a mentor.”
 
In this role, you will share the knowledge and experience you’ve gained in running your business with your future successor. You will literally need to pour yourself into your successor by investing as much time and effort as necessary to prepare him or her to step into your shoes.
 
In which areas of leadership is your successor the strongest, and in which areas does he or she need improvement? Work to build on your successor’s strengths and solidify weaknesses. “Put your successor in difficult situations where he or she will have to make tough calls or hard choices — and don’t be afraid to let your successor struggle a bit,” says Hamman. “It’s better for him or her to experience difficult situations  now on your watch rather than later when you aren’t around to help deal with the ramifications.”

 

 

 

 

What Does Mentoring Look Like?

So what does this kind of mentoring look like from a practical perspective? You can have your successor “shadow” you for several days (or even longer), following you throughout the course of your workday to see exactly what you do and how you do it. This includes sitting in on important meetings and phone calls and introducing your successor to critical customers, vendors, suppliers, and advisors like your banker, attorney, and CPA.
 
Also bring your successor with you to trade association meetings and introduce him or her to other important people in your industry. Encourage your successor to get involved by joining a committee or taking on an association leadership role to get further immersed in your industry and meet more influencers.
 
Your successor might need more technical training or education before he or she is ready to lead the company. This could include advanced technical certifications or an advanced degree, such as an MBA. “Choosing and starting to onboard your successor early will give him or her plenty of time to obtain the additional education, if necessary,” says Hamman.
 
In most situations, however, grooming your future leader is more about teaching him or her intangible skills like leadership, organization and strategy than it is about teaching technical skills. “Executive coaching, business development, time management, prioritization and team building — these are important areas that most owners should be focusing on with their future successors,” says Hamman.
 
And the sooner you start, the better. It’s really never too early to think about selecting and preparing your company’s future leader.
 
Cadence Bank can help you formulate and implement a business succession plan. Our subsidiary, Linscomb & Williams, a financial advisory firm, offers comprehensive succession planning services to our business clients. To learn more, please contact a Cadence Bank or Linscomb & Williams representative.
 
This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.


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