Gary Begnaud of New Jersey, an Executive Vice President/Wealth Management, Financial Advisor at Begnaud Wealth Management Group of Janney Montgomery Scott, LLC is designated a Chartered Retirement Planning Counselor® as well as a Certified Divorce Financial Analyst®. He is often asked about business succession planning. In the following article, Gary Begnaud explains the basic principles of planning an exit strategy and transitioning a business to the next generation of leadership.
Companies constantly seek to establish a stable, effective, and sustainable leadership pipeline. But Gary Begnaud says this is much easier said than done. Many business owners face countless obstacles when attempting to create a strategy that’s flexible enough to meet the ever-changing needs of the organization, employees, and industry.
Gary Begnaud of New Jersey says that owners who work with an esteemed financial planner often have the best results. Proper succession plans instill confidence throughout the organization, ensuring the future leader selection process is comprehensive and fair.
The Benefits of Succession Planning
Gary Begnaud explains that preparing for future growth is the driving force behind the succession planning process. Business owners who take this on board ensure their company never acts reactively to fill empty roles. Instead, transitions are meticulously thought through and smooth to make sure leadership changes don’t prevent the business from meeting goals.
Professionals like Gary Begnaud note that adequate succession planning elicits the following benefits too:
- Motivates employees by setting clear growth opportunities
- Identifies skill gaps and talent demands
- Adapts the company to talent and demographic changes
- Transitions specialized skills into crucial roles
- Maintains institutional knowledge
A Deep Dive into Key Considerations When Business Succession Planning
Gary Begnaud of New Jersey says that succession planning isn’t something business owners take lightly. After all, it’s often their life’s work and fortune on the line.
To get off on the right track, many entrepreneurs choose (or are advised) to focus on the fundamentals before diving into the specifics. Once they’ve determined the basics, turning their attention to the nitty-gritty details doesn’t seem like such an ordeal.
Matching Succession Planning with Goals
The worst succession plans are made in a vacuum according to Gary Begnaud. Organizational leaders pick successors based on personal bias while failing to see whether their choices will benefit their business.
Owners must understand the importance of aligning their plans with their business goals. In addition, choosing successors who can help keep the company trucking toward its objectives is imperative for a well-bolstered succession plan.
Understanding Transparency is Key
Business owners have found it enticing to keep their succession plans private. But Gary Begnaud says it’s important that current and future executives understand the goals, objectives, and opportunities.
Such a fluid environment can’t go unchecked in a succession plan. Companies that foster open communication about career goals and aspirations are equipped to deal with role changes.
Overviewing Internal Talent
Leaders should focus on retaining and developing their current employees rather than trying to externally recruit to fill empty spots within their succession plans according to Gary Begnaud of New Jersey. Present staff already understand the business’ goals, processes, and missions, meaning they’re more likely to effectively keep it on track throughout (and after) a transition.
Succession planning professionals note it’s vital to consider qualitative aspects like employee satisfaction, readiness, and professional development when internally choosing successors.
Focusing on Targeted Development
Chosen candidates must be ready to take on their new leadership role when the time occurs.
By assessing their high-potential employees, business owners can prioritize and customize their individual development needs. Employee satisfaction will likely increase, while it will also showcase a clear-cut path for their internal growth.
With that said, Gary Begnaud explains that all the above must align with the employees’ personal goals and ambitions. Unfortunately, companies veer off course by believing everybody wants to be on track for a leadership role.
Establishing Accountability
Succession plans never work when current leaders, board members, and CEOs aren’t taking responsibility for selecting and developing employees.
In a perfect world, business owners should regularly discuss the succession strategy in executive meetings to ensure leaders:
- revise goals and processes.
- define roles and individual expectations.
- outline measurable goals to determine the success of the plan.
Creating the Framework
Gary Begnaud of New Jersey reports that many succession planning strategists recommend mentoring between employees and those in critical roles. This continuous learning scheme reduces steep learning curves, training costs, and time spent developing.
It provides a seamless environment for leaders to share their knowledge, experience, and skills, and nurture their future successors in readiness for promotions.
Cutting Taxes
Working directly with a financial planner or a tax preparation business when succession strategizing ensures business owners get the most bang for their buck. Experts recommend the best ways companies can position themselves within the financial field to cut taxes as much as possible.
Reviewing the Succession Plan Regularly
Finally, reviewing the plan regularly ensures it remains relevant and fluid. Fast-paced societies demand agile businesses and thus ever-changing plans.
By staying on top of adaptations, owners find themselves in a much better position (financially and otherwise) when initiating leadership transitions.
Begnaud Wealth Management Group
of Janney Montgomery Scott, LLC
701 East Gate Drive, Suite 210
Mount Laurel, New Jersey 08054
856.291.5018 / gbegnaud@janney.com
(Member: NYSE, FINRA, SPIC)
