The path to business success is paved with challenges. From identifying a concept to launching a business, keeping customers happy, generating new sales, managing staff, battling competition and navigating the regulatory/legislative landscape, business owners are typically caught on a conveyor belt of challenges and obstacles to be overcome.
For all but the most disciplined business leaders, this means little time is left over for strategic planning. And whatever strategic planning is undertaken tends to focus on the most immediate or pressing challenges, rather than the longer-term issues.
As such, succession planning is often the most overlooked aspect of business strategy despite, potentially, being the most important. Even in the most mature economies, this is often a neglected area of business planning. Similarly, Saudi Arabia’s next generation of entrepreneurs are often (understandably) focused on growth at the expense of forward planning.
However, it cannot be stressed enough that it is never too early to start the process of succession planning and the earlier this thinking is embedded into company procedures, the easier the end process will be. All business owners exit at some point, but with varying degrees of choice and success. Having a solid succession plan in place greatly increases the chances of exiting on one’s own terms and with more success.
Succession planning is integral to a business’ survival as, without it, there is simply no going concern. It is first and foremost an exercise in implementing robust systems – these are the systems that drive efficiency, encourage consistency and mean the business is less impacted by staff turnover.
Although this sounds simple in principle, it is often more complicated in practice. In our experience advising company owners from a broad range of sectors, we see a number of common themes and mistakes which create significant obstacles to successful succession planning.
A “do it yourself” culture
Many business owners have a tendency to assign key tasks to themselves rather than delegating to someone more capable, or upskilling employees.
Centralised decision making
By definition, business founders can be reluctant listeners. To get to their position, they have learned to trust their instincts and have developed a strong sense of self belief that means they tend to assume all decision-making responsibilities or, worse, settle for inertia.
Ignoring structures and systems
A lack of structure and systems make a business very unattractive to new owners or leaders as this is a threat to business continuity. A structureless organisation with no centralised records of processes, procedures, and/or intellectual capital, can see its value erode very quickly.
Failing to incentivise staff
Businesses in Saudi Arabia rarely have formal structures in place to reward and incentivise staff. Formal appraisals and transparent bonus structures are key to ensuring staff loyalty, which is an integral part of business survival.
Avoiding the big decisions
As a business transitions from one chapter to the next, it is important to take decisive action on big decisions early. Unnecessary contracts, disruptive staff and other business critical issues need to be reviewed and resolved swiftly so they do not add unwanted friction to the succession process.
Having established the parameters for failure, what does success look like? Success in this context can be best described as minimising key man risk. Though the role of the founder(s)/leader(s) may well remain critical to the strategic direction of the business, their presence (or absence) should have no bearing on day-to-day operations.
If you have mitigated the business’s reliance on one individual/key individuals, then the succession planning is complete. If the business can operate smoothly without any key players present, it means the right structures and systems are in place and the business is a going concern.