Whether you plan to retire or want a change of pace, construction business owners will need a strong succession plan in place. A successful plan sets up your business, your workers and yourself for a smooth transition able to weather any change. Here are some steps to take to ensure a smooth succession:
1. Set Up Your Construction Business for Succession Success Now
The best way to set up your company for success down the road is to start planning now. Business owners leave companies for several reasons, but sometimes health concerns or other events may cause succession to start sooner than anticipated. Just like planning for the job site, the more planning you can do upfront will help the transition go much smoother, even if it is sooner than you hoped.
2. Build New Relationships – Online and With Next-Gen Leaders
Meeting people online doesn’t only help the search for talented workers – it can help you find talented management and ownership, too. However, you’ll want to focus more on quality over quantity. It may be tempting to find as many people as possible to expand the potential talent pool, but a pool full of unreliable relationships will not be effective. Focus on building solid relationships with reliable and trustworthy people – and that’s good practice online or anywhere else.
You should consider the next generation in leadership roles for your business, too. Gen Z is already part of your workforce. Encourage involvement in daily operations so they get a feel for the business and the kinds of decisions that will need to be made over time.
3. List Potential Successors
Once your business relationships are developed, you’ll want to list potential successors. Who at your company has shown leadership initiative? Who has a solid mind for financial concerns? Who knows your business operations in and out?
When looking outside your company, who have you met that can bring new ideas to the table? Who has an eye for improvement and the ability to lead?
List out the people you think would set your business up for success in the future, then talk openly about it with them and with employees. Let them know you’re considering your exit from the business and make note of their reaction. How people respond to news is a good indicator of how they operate under new conditions. This will also give your potential successors time to consider their desire to take over and prompt them to take initiative in coming decisions.
4. Balance Financial Planning
Financial planning is another big part of succession. Your balance sheet is crucial for continued success down the road. If selling the business, you’ll want to build in some flexibility with the sale price. Flexibility allows for more options – dollars are important, but people are too. You will want to balance the right leadership with the right price.
Make sure you budget with room for error or rough patches. Building financial success for succession may look a little different from financial success when business is working as usual. Room for error will help keep the financial aspect of the transition running as smoothly as possible.
5. Be Realistic About the Transition and Goals
You’ve planned for your people and balance sheet – now what? Review your succession plan and make sure it makes sense. Lofty goals that aren’t reasonable will hinder your success. Make sure your transition plan is deliverable and everyone involved is prepared for the process. Address any questions or potential challenges as early as possible and assess whether your plan is in alignment with your goals.
Then, when it comes time, your successors will be set up with the best transition possible and you’ll have peace of mind knowing the business is well cared for with a good plan.
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