6, July 2017
The Importance of Strategic Planning (Part 1 of 2): Succession Planning
Strategic and business planning is critical for manufacturers. Sometimes, companies are reluctant to engage in planning because they view it as an interruption to every-day productivity. It can seem challenging to justify investing time into planning while your products need to be made, but strategic planning is instrumental in saving your organization time and money in the long-term.
In this two-part series, we’ll address two important areas of strategic planning: succession planning and continuity planning.
Business Succession Planning
This topic is vital because many manufacturers are a part of a small or family owned business. If a small or family owned business does not have a specific successor set up to take over, the business can suffer major losses or even fail as colleagues struggle to find a replacement.
Here are some tips for developing your Business Succession Plan:
- Establish goals & objectives
- Refine any goals or objectives your business already has in action—using the company mission statement is a good sounding board—including the goals of next generation management. This is best accomplished through Hoshin Planning, but that’s a whole topic in itself.
- If applicable, determine the importance of family involvement in the business, especially in leadership or ownership of the company. If necessary, consider bringing in professional managers.
- Identify, compile and retain a team of professional advisors to act as liaisons when necessary.
- Create a Decision-Making Plan
- In case any future disagreements break out, have a process for involving family members in decision-making, as well as a method in place for resolving disputes.
- Document the succession plan both verbally and in writing. Distribute the succession plan to any family members/stakeholders.
- Establish the Succession Plan
- Identify future successors, as well as the active roles and additional support for any management or family members. Compile this all into a list.
- Address any taxation implications, such as sale or transfer of ownership in the case of death or divorce.
- Make sure to review owner estate planning, so as to minimize taxes or prevent delays in the case of transferring stock to spouses or remaining owners. Also create a buy/sell agreement as a last case scenario, to reflect the value of the business and also minimize taxes.
- Create a Transition Plan
- Consider your options for transferring the business, whether it be through purchase, gift, or some combination of the two.
- Establish a timeline for the implementation of the plan, and make sure current/future leadership members are aware.
Impact Dakota additionally provides Succession Planning services. For more information, click here.
About Mark Volesky
Mark Volesky is a Senior Business Advisor with Impact Dakota. Since 2003 Volesky has been assisting companies from a wide variety of industries increase profits and create and retain jobs. He has conducted more than 150 kaizen events, including co-facilitating continuous improvement efforts with Shingijutsu Consulting and Normen Bodek. His emphasis is facilitating the design, development and implementation of lean strategies on an enterprise-wide basis.