Take time to plan ahead long term

WHEN you’re in the midst of running a business, planning ahead for the long term can be a challenge. And this can be particularly true of SMEs, where the management team can often be in the thick of daily operations.

But as the case of WPP and Martin Sorrell has shown us, a long time at the helm of a business can sometimes come to an end quickly. And without a clear succession plan in place, investors and customers alike may have to deal with prolonged uncertainty. Bloomberg called the absence of a clear WPP succession plan “a big mistake”.

So how can SMEs think about succession intelligently? One potential solution is to try and ensure that your company’s board of directors isn’t exclusively controlled by the founding team. External board members can be a crucial asset in planning for a transfer of ownership, while also providing valuable insight into your business’s ongoing performance.

It’s also important to separate emotion from logic when assessing a business’s prospects. People who have worked to build a business will invariably have some fondness towards the organisation they’ve helped create - particularly if the business has been operated by a family. But decisions like what will happen to your stake, or whether you’ll retain any non-executive interest in the company, must be approached rationally.

Many family and small business owners say that succession planning is a major worry. Of course, SMEs should take care to plan ahead, but doing this while preventing uncertainty from affecting day-to-day business could be a tricky balancing act. I’m interested in helping business owners scale successfully, but planning for a stable exit or transition has to be part of the equation. Will the lessons of WPP trickle down to Britain’s smaller enterprises? Let’s wait and see.