Business succession is still a topic rarely discussed in Brazil, but it makes all the difference for business continuity. Only 30% of family businesses survive to the second generation, while this percentage is only 10% to 15% when it comes to the third generation of successors.
Companies with a non-family organizational structure tend to be more enduring in the market because turnover in management positions is higher and the leader's performance is constantly evaluated. When business is not doing well, the natural course of action is replacement.
Be it in a Family business environment Or not, business succession needs to be discussed so that the business can be perpetuated and you can leave a structured management history for those who come next.
What is business succession?
The term refers to the transfer of leadership in a company from one manager to another. It is up to the successor to continue the business, taking strategic decisions that ensure the financial and economic health of the company.
Family businesses typically go through business succession when the company founder passes away or is no longer able to manage the business, transferring decision-making power over the business to a child or close relative.
In non-family businesses, the process can occur through the departure of the executive, strategic changes within the corporation, or restructurings that require profound transformations in management. There's also the possibility of the current manager leaving the position to become a member of the board of directors or simply to retire.
Why think about business succession?
A company is born out of a purpose that goes beyond generating wealth for those who manage it. An educational institution, for example, has as its mission to foster education in the country, regardless of who is in charge.
In this regard, it's necessary to think about business succession so that the business continues moving towards its goals even if you are no longer present. And the best way to ensure your venture crosses decades in good financial health is to prepare your successor to fill your shoes.
This doesn't mean that person has to have the same ideas and goals as you. They need to understand the organization's history, how it started, developed, and where it intends to go. Your successor should also share the same values that guide the company and ensure, above all, the perpetuity of the business.
How to prepare for business succession?
Business succession must be part of your strategic planning and should be gradual, with you acting as a mentor to your successor. Share your experiences, show the paths you've taken, the right and wrong decisions. Listen and guide.
Communicate your values and share your thoughts on the company's future. Be open to new ideas, constructive criticism, and feedback, after all, your successor will not be a clone of you. There may be conflicting ideas, but that is natural. The important thing is that the new leader of the company is aligned with its strategic objectives.
Gradually transfer decision-making to your successor, delegate responsibilities, and observe the professional's behaviors and actions. Share historical data and organizational results so the future leader knows how to continue your actions. If your company uses a strategic management software, where indicators are monitored, action plans, projects, critical analysis reports and replanning, history of deviations and corrections, and, mainly, the company's achievements are recorded, it becomes much easier to pass on the “story” of this company.
Your successor will have access to key business information and will be able to learn about the actions that have brought your company to where it is today.
Finally, it is very important to communicate the upcoming changes to all employees. Your successor needs to be well-liked and respected like you.
Want to prepare for a smooth business succession? Opt for a Enterprise resource planning that registers your entire organization's history!
