Building leadership is what succession planning is all about, Kennedy points out. “Exit planning is about replacing your income, and succession is about replacing yourself,” he says. “The disciplines in the succession part are more behavioral. In other words, you have to create a championship team with your managers, and then you have to move that team into ownership – starting to think like owners, as in putting the company first all the time,” he says.

Not “Just Business”

While it may seem easy to write the transition process off as “just business,” succession planning can be very personal. In fact, Balogh says he was surprised by how emotional succession planning was from the perspective of the incoming leader.

“It’s very emotional anytime you leave a particular role and move into doing something else,” he says. “You may still want to call that favorite customer or design something with your favorite engineer, but as you change in terms of your roles and responsibilities, you have to give up certain things. There are some things you may want to keep doing, but it doesn’t make sense after a certain period of time. You have to think ‘There is probably somebody who’s better at this than I am, so let’s get them involved.’”

Putting the company first may be a crucial quality, but no one says it’s easy. “Business is emotional,” Kennedy says. “You can’t spend 30 years building something with a whole team of people and just walk away. Business is not just what you do, it’s who you are.”

For business owners who truly believe their company is part of who they are, now is the time to create a plan that will build their business into a legacy.

Five Tips to Start Building Your Succession Plan
  1. Begin planning today. “Building a plan now provides you flexibility so you don’t have to be trapped in the corner when there is a health issue, loss of a significant customer, etc.,” says Brad Baumann, principal of CliftonLarsonAllen LLP, a wealth advisory and accounting firm. “The reality is what you decide now may not be the final outcome, but having that conversation now helps provide clarity.”
  2. Consider an outside perspective. For composites company Mar-Bal, the transition process was smoothed by the assistance of an outside advisory board. “That was a game-changer for us,” says Scott Balogh, president and CEO of Mar-Bal. “That group helped us develop what I consider to be very good sales and operational planning tools.” The group helped to form, and now examines on a quarterly basis, key performance indicators and business metrics that keep the business constantly improving its quality processes.
  3. Ensure everyone is on the same page. “One of the largest mistakes I see is around communication,” Baumann says. He cites an example from a family-owned business: A son is a key member of the management team in his parents’ business, and he would like to ultimately take over the company. However, the parents haven’t discussed succession planning. That’s discouraged the son, who is considering leaving the business – a move that would be “devastating to the business that he has helped grow,” says Baumann. “For a business owner looking to step away, the decision is very difficult and personal, and those are not conversations that family members always like to have – so they don’t.”
  4. Understand your blind spots. Kevin Kennedy, CEO of succession planning specialist Beacon Exit Planning, says that self-awareness is a key ingredient for leaders. “The most important part of succession is having capable leaders. Leaders are the people everyone looks to to get through whatever problem they’re dealing with, and it’s earned, it’s not appointed. So you have to really work on having people recognize their blind spots and [build] self-awareness,” Kennedy says. Once acknowledged, these blind spots can often be filled through training.
  5. Never stop planning. Kennedy encourages business leaders to review their succession plan on a regular basis. This means continually looking for individuals who can be groomed for future leadership. “To do that, you’re continuously training,” he says. “People who believe in succession always prepare for the unknown.”