There is one thing that the owner of a privately held business can do to increase the value of the said business.
Have a management team that can run the business without him/her.
To be truly saleable, the business needs to be more than just the owner.
Succession of the business leader also becomes important when retirements, death, or other potentially disruptive events occur. Replacement managers must be ready to step in when needed.
Here is a succession process that works.
Identify the critical, most important positions that must be filled.
You will need to identify all of the critical positions that need to be covered. This involves an assessment of where the organization is now, and where it will likely be in the future. What sorts of opportunities will present themselves in the future? Does the current management and organization provide the flexibility and effectiveness in execution to allow for these opportunities to be turned into reality?
Know the competencies required for these critical positions.
To know who is best for a specific management role, you need to know what is required to do the job.
Identify who in the organization can best fit the requirements of the position.
Evaluate each potential candidate for the job and the current person in that job. This involves looking at not just who is in the position now, who is the likely next person to take over that role but also several layers down. Make sure there is a backup for the backup.
If there is a gap in your management team – no one seems capable of fulfilling the role of the position being evaluated – where will you find someone?
This means looking outside the organization. Are there any candidates that could do the job? Is someone readily available? If not, it may be necessary to hire a recruiter to find someone. Don’t wait until the job is “open” before looking. Have a plan in place.
Document and implement the succession plan.
Once you know what the situation is, document it. Put together an action plan that specifically identifies needed steps. And who will be responsible for doing it? Then just do it.
Finally, periodically review the plan and adjust as time goes by.
The military says that no plan remains unchanged in the face of the enemy. This means that you will need to be continually evaluating and assessing the business opportunities, management roles, and personnel. This is an ongoing process and one of the most important that you, the business owner, will ever do.
