Proper succession planning, or the lack thereof, results in the success or demise of a company. With employee turnover at an all-time high in the transportation industry, now is the best time to ensure your company’s future success.
What is Succession Planning?
Think back to the last time a key employee left your company. Did you see it coming? Was it a planned retirement, or did the two weeks notice take you by surprise? Either way, appropriate planning is necessary for any company that hopes to survive in today’s transportation industry.
Basically, succession planning protects you and your business in the event of a key member’s retirement or untimely departure. It is the parachute that catches you when Plan A doesn’t work out.
This is accomplished through the development of an effective business strategy for:
- Admitting new shareholders in a manner which is financially fair both to them and to existing shareholders.
- Assuring the transition of important customers, referral sources, “books of business,” and divisions when shareholders retire or otherwise depart.
- Initiating and maintaining communication and accountability
Importance
So, your company isn’t affected by employee turnover? Nevertheless, succession planning is necessary for a strong competitive advantage. It is also needed to:
- Promote company growth and vitality;
- Provide foundation for continuing and expanding divisions and departments of shareholders who retire or depart;
- Retain talented and experienced employees;
- And, add equity capital to company to replace capital distributed to departing shareholders.
Goals
As stated previously, the ultimate goal of succession planning is to keep your business growing in the event of key member’s retirement or untimely departure. Additionally, it signifies to other employees that you recognize their importance to the success of the company. In turn, this leads to an increase in employee loyalty; and, therefore, a lower turnover rate. Proper succession planning also limits the risk of frustrated shareholders jumping ship to competing companies. Overall, it is a necessity to any company that plans to survive in today’s cut-throat transportation industry.
Want to learn more? On March 24, 2016, Truck Writers hosted an educational webinar on how closely held businesses expose themselves to significant risk without proper succession planning. Subject matter experts Gary Carlson and Nate Nelson discussed the ways in which business succession plans can fall short, and the severe consequences that follow – including undue tax liability, unclear chain of ownership custody, cash flow challenges, and more. Please watch the free recording of the webinar, and find out how to:
- Protect and preserve continuity of ownership into the future
- Efficient manage taxes and transfer of ownership interests
- Implement your plan – including lenders, insurance, and investors
- Maintain a strategy to address unforeseen occurrences