 Undertaking succession planning is in the interests of individuals who are seeking promotion or who are involved in running a team or a business. The business you work in, no matter what it does, is the sum of its employees. The employees make the decisions, from the day-to-day to the strategic, and they deliver the work or the product to your customers. If you work at any level within a business, succession planning should be on your to-do list. And in this video, we're going to take you through four key reasons why this is the case. My name is Jess Coles, and I've had a 25-year career in business management across household names like innocent drinks and fosters, to many less well-known businesses. If you're new to this channel, Enhance.training provides online business courses to help professionals, managers and business owners improve their performance. If you like this video, please give it a thumbs up, subscribe and share it with friends. Let's cover what succession planning is. And just in case you aren't sure, succession planning is a planning activity to identify and develop leaders, managers and key employees to, firstly, support career progression within a business. And secondly, to quickly fill gaps left by employees departing the business. And thirdly, to develop the next set of managers and leaders within the business. If the management team or business allows big skill gaps to develop between the employees and key positions and their next best person, then the business it could find itself with significant problems on its hands when a key person leaves. Allowing a key role to be vacant for a period of time can be costly to the business. Growth can slow, customers can leave, other team members may become overstretched and they might leave, and increased levels of mistakes can happen etc. Recruiting and training external individuals takes time and is a distraction, both impact business performance. Succession planning overcomes these challenges and creates great benefits to the business. Here are four great reasons to put succession planning in place in your business. Anyone who's been looking to get a promotion will have heard the challenge of, who's going to do your work if I promote you? All words to that effect. If you don't have a good solution in place, your promotion can stay off the table. If you want promotion, then provide credible solutions to your manager for who is going to do your role when you're promoted. I mean hiring externally is an option, though it's if it's your only option, don't count on that promotion just yet. By developing a credible succession plan and putting in the investment to make that plan happen, you're demonstrating firstly your commitment to putting the business and the team's interest before, or at least alongside your own. Secondly, you won't create a problem for your manager when you move. Thirdly, you're showing that you're a good team player who does think of others. And fourth, it's just good management practice. It does take confidence in the value that you create within the business to invest in succession planning. Many employees fear that putting good succession solutions in place means their job is less secure as their employer has a ready replacement for them. This is a risk and it always will be. I would argue though that this risk is easily outweighed by the opportunity of getting promoted. And in my experience, businesses never want to lose good and skilled members of staff that look out for the interests of the business. My final thought for you, if you're worth promoting, you're definitely worth keeping the business. So don't fear making it easy to promote you. A business and the managers within the business should not expect an employee to stay in the same role for years and years. Therefore, employees will either move to another role within the business or they'll move to another business. And when this happens, the disruption can be pretty minor through to quite major, depending on how dependent the business is on the role in question and what the business has done to plan for this eventuality. Good practice would be to get in place a plan of what would happen if a person were to lead the team. A useful place to start a succession plan is to answer these five questions. Firstly, which individuals can move into this position now, in a year and in two years? Secondly, what training and experience do I need to provide to the individuals who are not ready now but have the potential to move in the next year or two? Third, how can I build this training into the individual's day job and make it sure it happens? Fourth, for those who are ready to move now, what can I do to keep them engaged and staying with the team? And fifth, if I have to recruit externally, which is my plan B, then how would I do this and what timeframe would be realistic? And then once you've done this for the immediate position you're thinking about, then you have to repeat this for the next position down through your team so you have all positions covered. The benefits of having a good succession plan in place throughout the business are, firstly, businesses with active succession planning are usually more attractive to potential employees. It is easier to recruit and you get better employees. Less disruption is experienced with a plan as you don't have to create a solution before putting it in place. Thirdly, you get a quicker solution as you have one or more people within the organisation that can move into this role rather than having to wait for recruiting externally and then training new joiners. And fourth, you get better employee retention as development of individuals is a key focus for the business. These reasons alone are usually offer a huge return on any investment you might make as a business to set a succession planning programme up. Business continuity, repeatability and strength make a business more valuable. This is common sense, but it's also borne out in business valuations achieved. Ask any MNA broker or specialist. The ability of the management team is a critical part of the valuation of a business. This team makes the key decisions and is tasked with running and growing the business. If you as a business owner were not in this team day-to-day, would the business performance change? If you are a business owner looking to sell your business, then your succession planning will impact the sales price you can achieve for your business. Imagine these two scenarios. In scenario one, the business owner works daily in the business and remains the key client contact for the top accounts. This owner makes all the key decisions in the business and the business has a turnover of 20 million say and a profit of 1.2 million each year. And now on to scenario two. The business owner is an involved investor, leaving the day-to-day running of the business to her management team. The business owner holds the position of chairman and only gets involved in the key strategic decisions for the business. And the business has a turnover of 20 million and a profit of 1 million each year. The lower profit is because of the extra costs of the management team. Which business is more valuable to a purchaser? In nearly every case, the business in scenario two will be more valuable and probably by quite some margin. Plus I would argue that the owner in scenario two has the potential for more time for other things and less stress day-to-day. Negotiating sale in which you leave the business much earlier with more of the sale price paid earlier rather than having a long earn-out period is also a lot more likely in scenario two. Just a quick point of note, there will be buyers that don't want your management team. These will almost certainly be trade buyers and they are usually direct competitors of yours or they operate in the same industry as you. Financial buyers are effectively everyone else and they will want a strong management team within the business that is not dependent on you. In short, why reduce your options and the competition to buy your business as both are likely to reduce the price you achieve. Again for business owners, investing in developing good managers and leaders within your business to take over from you when you retire can leave you with a lot more options. Two options are so you can sell your business for a higher price as we discussed previously or you can keep your business and earn dividends from it. For example, you can move into a chairman role. This allows you to participate in board meetings and the key decisions of the business but avoid the day-to-day running of the business. Or you can step away entirely from the business and become an interested investor tracking the financial performance and holding the management team to account. Both of these options and there are others are possible when you have a management team in place that can continue running and growing the business. When it goes without saying that you will need firstly to be confident in their ability to run at the business and make good decisions and you'll need to trust their integrity. If you're not happy to let go and step away from the business, you may not have done enough work to develop your team or get the right people in the right positions. It is well worth doing so if you intend to move away from your business or sell your business for the best possible price. Planning and developing one or more options for replacing you in your current role is absolutely in your interest if you firstly want to get promoted or move to a different role than the business. Secondly, as a business owner you want to sell your business or make your business more valuable to a buyer. And third, if you want to develop your options as a business owner. I would argue that succession planning and investing in making that plan in reality is one of the best investments that you can make. To get more insights to different aspects of business management then visit us at enhance.training and also check out our other videos within the business management playlist. And if you like this video please hit the thumbs up button below and subscribe and hit the bell to get notified of our weekly video releases. This really helps us to produce more great videos to help you. Thanks very much for watching and I look forward to seeing you again soon.