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Strategic Succession Planning

Succession planning is a critical yet often overlooked aspect of running a small business. As owners prepare for a transition, assembling a team of trusted advisors—including an HR consultant, attorney, and accountant—can make all the difference. These experts provide valuable guidance through the complexities of the process, ensuring that due diligence is thorough and effective. By addressing key HR and legal concerns early, business owners can strengthen their position in negotiations and increase the likelihood of achieving a favorable sale outcome. 

In a panel discussion focused on succession planning, ESC invited key HR and legal experts to share insights into effective strategies for transitioning business leadership smoothly. Our experts included: 

  • Amber Store: A litigator with Hurwitz Fine P.C. specializing in business, employment, and estate litigation with significant experience in both state and federal courts. 
  • Melissa Pizzino: Special counsel with Hurwitz Fine P.C. in trusts and estates, offering 15+ years of expertise in elder law, estate planning, probate, and administration. 
  • Liz Warren: Executive VP and Chief People Officer at ESC, focusing on strategic HR support and employee issues. 
  • Mary Davis: HR Business Partner at ESC providing on-site support with HR strategic projects and ongoing guidance. 

While the panel discussion provided extensive information, a brief overview of the key points is included here. Please continue to follow ESC’s blog for more insight from this informative panel. 

Tools for Succession Planning

An organization’s succession plan is a ‘Living Document’ that should be continually updated, much like any business plan.  The plan is part of your Strategic Workforce Development where your team is identifying high potential employees early and preparing them for key positions in the future.  Two tools that aid in this process are the Nine-Box Grid and SWOT analysis. 

A nine-box grid analysis is commonly used in succession planning to assess employee performance and potential, helping small businesses identify future leaders and plan for key roles. It’s especially useful for small businesses that rely on a few key individuals, as it provides a structured way to evaluate talent and prepare for eventual transitions in leadership. 

In succession planning, the SWOT analysis analyzes workforce strengths, weaknesses, opportunities, and threats from the lens of current workforce talent in the organization. By identifying both strengths to preserve and weaknesses to address, the SWOT analysis provides a clear roadmap for what the successor should prioritize. 

The analysis also mitigates risks associated with transition.  By anticipating threats and preparing for them, the business can reduce disruptions during the succession period. Weaknesses and opportunities guide training and development plans, equipping successors with the skills they’ll need. Finally, a SWOT analysis helps the current owner and successor to align strategic goals, building a consensus that smooths the transition and ensures continuity. 

When considering the eventual sale or transfer of a business, the number one consideration is who is the appropriate person to take the reins of the newly acquired or transferred business. But what about additional heirs that may not be involved in the business or subsequently have non-leadership roles in the company? To fairly distribute the inheritance among heirs, good estate planning aims to avoid resentment and eventual conflict. Planning tools like life insurance can help balance inheritances for other heirs. 

Another tool is a comprehensive Buy-Sell Agreement. This agreement can secure fair compensation for family members who aren’t involved in the business, establishing a clear path for distributing assets fairly while keeping ownership among active participants. Additionally, Trusts can control how ownership interests or income are distributed, allowing for a more tailored approach to meet individual needs while respecting the business’s operational integrity. 

By taking a strategic approach to succession planning, a business owner can secure both the financial and emotional aspects of transferring their family business. Proper planning ensures that the business remains viable, family members feel fairly treated, and the owner’s legacy endures. Working closely with financial advisors, tax professionals, and estate attorneys helps ensure that the chosen strategy is both tax-efficient and aligned with family values and goals. 

Employer Services Corporation provides clients with guidance on succession planning and workforce development.

Contact us today for more information on how ESC can support your business.