Some business owners know exactly who will take over their business. They might choose a sibling or their child to step up and take over the family business. Or, entrepreneurs who run large companies might choose a co-owner or partner to take over after they leave the company or pass away.
However, what if business owners do not know who their successor is? Choosing the right successor can cause business owners a significant amount of stress. To reduce that stress, here are a few factors business owners can consider when deciding who their successor will be.
Quite a few factors go into this decision
There are three general factors business owners must consider when choosing a successor:
- The future and goals of the business;
- What assets, resources and qualifications are needed for continued success; and
- How a candidate will fit into this equation.
To determine the third factor, there are a few questions business owners should ask themselves about the candidate:
- Are they trustworthy? A person’s character can play a significant role in how they run a business. Business owners should choose candidates they know they can trust with their business, both emotionally and financially.
- How do they handle challenges? Running a business is not always easy. Business owners must often think fast to resolve various kinds of problems. So, it is essential to choose candidates who handle issues effectively and efficiently.
- What kind of experience do they have? It always helps to have extensive education, however, experience often carries more weight when it comes to the business world. So, business owners should choose candidates with the experience and skills that meet their business’ needs, including good leadership and management skills.
- How well will they meet the business’ needs? One mistake that business owners often make is wanting to find a successor who is exactly like them. While it is important for a successor to share similar values and goals, different perspectives and strategies might be what a business needs to succeed in the future.
Choosing a successor and creating a succession plan can be a long process, but it is necessary to ensure the business continues on long into the future.