Future investors want to know what happens after they invest, so having a clear succession planning strategy and ongoing narrative is critically important.
Succession planning is an important part of any business plan, but it’s often overlooked when it comes to investor relations. Investors want to know what will happen to their investments in the long term, and having a clear succession planning strategy and ongoing narrative can help to ensure that their investments are secure.
Succession planning outlines the steps that need to be taken in order to ensure that the business continues to run smoothly in the future. This includes things like identifying and training potential leaders, creating policies and procedures, and establishing a clear management structure. By having a succession plan in place, investors will feel more secure in their investments, knowing that the company has a plan in place for the future.
A good succession planning strategy should also include communication. It’s important to keep stakeholders up to date on the progress of the plan, so they know exactly what’s happening. This might include providing regular updates on the progress of the plan, hosting occasional webinars or other events, or even writing a blog post to provide additional information.
At Bluestones, we ensure that we invest in and develop the people within our businesses. It\’s one of the reasons we\’re a multi-year Best Companies awarded business and one of the top 100 large employers in the UK (from an employee engagement perspective). Part of this development is through training, providing clearly structured career paths and promotion/growth opportunities, as well as understanding that as a business grows, building a succession plan is essential.
We also know that when a business is sold – and therefore where understanding the valuation calculation is critically important – having a clearly mapped out succession plan, will be a positive influencing factor in securing a higher valuation.
If in doubt, here are four main benefits to having a succession plan in place
Protects the company\’s future
A succession plan ensures that there is continuity of leadership and strategy, even if key people leave the business. This is particularly important for companies that are scaling quickly, as a sudden change of leadership can be disruptive and lead to a lack of direction.
Enhances value
A succession plan can help to increase a company’s value when it comes to MBOs, trade sales, or investments. Potential buyers or investors will appreciate the fact that the company is well-prepared for any eventuality and that it is not relying solely on the current leadership team.
Establishes a culture of learning
A succession plan provides the opportunity for employees to learn from their colleagues and to develop new skills. This can help to create a culture of continuous learning and development, which is essential for a progressive and growing business.
Retains key talent
A succession plan can help to retain key talent within the business, as it shows employees that their efforts and contributions are valued and that they have a career path to follow. This is especially important for companies that are scaling quickly, as they may need to rapidly bring on new talent and will need to have a plan in place for managing their existing staff.
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