The Top 9 Reasons Why Businesses Fail To Do Succession Planning – Part One
I know we talk about succession planning a lot on this blog, but that’s because it’s something that not enough businesses pay attention to. There just never seems to be an easy way to do talk about it. So today, I want to give you the top nine reasons that we think small businesses fail to do succession planning. Everybody puts it on their to do list. Everybody says, “This is going to be the year. We’re going to get it done, and we’re gonna put together a coherent, strategic succession plan and we’re going to make it work,” and then, of course, it just doesn’t happen. That’s just the nature of succession planning, and here are the first part of nine reasons why that is so.
First, it’s never urgent. There’s a distinction between important things and urgent things. Succession planning is incredibly important. But it’s rarely urgent because unless there’s a serious illness, you can always do it the next month or even next year. You can always get around to it, so the day-to-day stuff piles up and takes time away from doing this ultimately very important task, in favor of your more urgent tasks. It’s easy to put off.
Second, the professional community – the bankers, lawyers, CPAs, financial planners, etc. – focus on the drop-dead aspect because that’s what they’re trained to do. But focusing on the drop-dead aspect of succession planning gives you a false sense of security. Yes, you need a drop-dead plan, because you never know if lightning’s going to strike, and you don’t want to leave your business or your family in a lurch. But the false sense of security that it creates is a problem because you go to the lawyer, and the CPA, and you do the estate planning, and all that other stuff and you go, “Whew! Glad that’s over. I got all these documents now and I just spent $8,000 and I’ve done a good job of succession planning.” But no, you haven’t. You’ve only addressed what happens if you drop dead (and let’s hope you don’t). What happens if you live? That part of the equation goes unanswered 90% of the time.
Third, you get employee or family member push back (and this happens all the time). Let’s say a senior generation small business leader has three kids, and they’re all grown and married, and Mom and Dad and the three kids and the senior managers in the business all want to get together and do succession planning. They want to talk about a strategy for moving the business forward over the next 10 years, but somebody in the group says they don’t want to think about it, or they don’t have time for that right now. Succession planning sounds great, and they know you need to do it. But we have 10 other things we’re working on that are much bigger or more pressing than that and we need to focus our time on that. So you get pushed back and lose heart and it gets shuffled down to the bottom of your to-do list.
Fourth, it’s psychological. It’s always, always, always easier to not change what you’re doing. So yes, you need to do succession planning, and you need to hire some people and fire some other people, and you need to invest more money in this area, and have better IT, and do all this strategy and succession planning. But in the back of your mind, you’re thinking it’s always easier and safer, psychologically, to not do it. Succession planning and strategic planning is going to require that you undertake a process of change, and change is very threatening to us psychologically.
Fifth, how do you do it? Succession planning is complicated. There are lots of moving parts. There are a lot of people that need to be involved in the process, and somebody might not be happy with the process. As the business owner, you know your business, your processes, your people, your customers, and your vendors. You make decisions every day. But succession planning only comes along once a generation, so you don’t have well-developed muscles for those kinds of decisions. When you don’t know how to plan or what to do, there’s nowhere to go.
People say, “I know we need to do succession planning. But I don’t know really what my goals are and until I know my goals, then I really can’t get professional help.” That is so wrong. Part of hiring a professional, whether it’s an attorney or a CPA or us as a business coach, is to help you focus your mind on the realistic alternatives. Okay, you don’t know what your goals are. But shouldn’t a good professional be able to help you define what those realistic outcomes might be?
Join us next time as we continue with the other four reasons that business fail to do succession planning.