Business owners must take several steps to create an effective succession plan. After all, there are many aspects of succession required to ensure that the business – and its legacy – continue.
One of the essential steps business owners must complete when creating their succession plan is conducting a comprehensive gap analysis.
What is a gap analysis?
Most business owners conduct gap analyses several times each year. It allows business owners to determine:
- Where they are in terms of achieving business goals;
- What resources they need to achieve those goals; and
- What is preventing the business from reaching those goals?
Essentially, business owners identify the gap in their business’s performance and create a strategy to eliminate it. It helps businesses to improve and continue improving.
Why is a gap analysis necessary for a succession plan?
Gap analyses are a tool that business owners frequently use, and they are always necessary to run a business efficiently. However, business owners must conduct a conscious gap analysis tailored to their succession plan.
The California Department of Human Resources states that the gap analysis for a succession plan should:
- Determine candidates for leadership succession and plan how to develop their talents for leadership;
- Identify skills and qualifications needed now and in the future for the business to succeed in the rapidly changing world; and
- Evaluate what direction the business is moving in now, and where it will be moving in the future.
Since gap analyses consider the present and future, they help business owners see the achievement gaps and examine how to implement the strategies needed to close those gaps. That is why they are essential for a succession plan. And determining what gaps exist between the business’s present and future not only help to create a plan, but also choose an effective successor and ensure the business will be in good hands.