Lack of succession planning puts futures of small firms at risk
Over six in ten small UK business owners are unprepared for the long-term loss of key staff members, as a new study highlights the neglect of succession planning within firms. Despite the revealing statistic, the survey of over a thousand small business leaders, by challenger bank Aldermore, revealed that more than one in seven considered the loss of a senior team member as the biggest threat to their business. For one in six respondents, the fear of losing an entire team was a considerable worry. Further demonstrating the importance of succession planning, nine in ten small business owners said they had at least one member of staff who would be difficult to replace. For owners of micro companies who depend on a small team, effective succession planning can prevent operational delays and damage tobusiness growth. Commenting on the findings, Carl Dammassa, a director at Aldermore, confirmed that succession planning should be considered a crucial part of an owner’s strategy. it is concerning to find that the majority of SMEs do not have any succession plans in place despite being conscious of the adverse consequences that may result should crucial employees leave the business, he said in a statement. Small business owners unprepared for resignations could look to those with a succession plan in place. Almost half of those with a succession plan said they took measures to ensure their employees considered the company as a viable career prospect, delivering workplace training to widen employee’s capabilities beyond their current role. Over two in five already had individuals in mind to take on specialist roles if other employees departed the company. when faced with the day-to-day demands of running their company, business owners can easily push succession planning down their list of priorities, Dammassa added. however, good employees are hard to find, so for SMEs putting in place a strategy to deal with the departure of key individuals is imperative, particularly since the departure of a key employee has the potential to hit smaller firms with fewer employees hardest. Succession planning was recently found to be a major worry within family-run firms. According to one study, over a third of family business owners had major concerns over who would take the reins when they retired. Developing the skills of the next generation and engaging them in the business were the main drivers of concern for the family entrepreneurs. Thinking of hiring your first member of staff? don’t miss our three-part guide
Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.