Ensure that your value drivers remain happy with their current positions, prioritize your key employees and create incentive plans accordingly.
It is important to prepare for the replacement of a leader in your organization. Replace departing leaders from within the organization is the best approach.
It is important to consider the impact on cash flow of the owner. Are they able to generate new revenue from new clients? Are they able to run expenses that could be wiped out if the business is sold?
When a leader leaves, it is crucial to plan how you will maintain both internal and external relationships. Unmanaged transitions can lead to employee or customer churn which can have serious financial impacts.
Long-standing customers can be lost to new competitors. When a key leader leaves, it is important to maintain strong relationships with key accounts. Don’t underestimate the power of relationships.
A company that has efficient financial systems will facilitate a smooth transition. Strong elements in a succession plan include a financial model that can be used for three, five, or ten years.
Before a key leader is willing to leave, it is important to understand their intrinsic value before the changeover. Incorrectly calculating the intrinsic value of the departing leader can lead to significant unplanned expenses.
Relationships are the foundation of businesses. It is important to find a successor who is open and willing to learn, while maintaining the continuity of operations.
Employees can become disorganized if there are leadership changes. Employee turnover can be minimized by being transparent about changes in leadership and expected company changes.