What is Succession Planning and Why Does it Matter?
If you’re an environmental business owner or leader, you’ve inevitably given thought to the future of your business. We've garnered expert advice on how to ensure your business succeeds after you retire.
If you’re an environmental business owner or leader, you’ve inevitably given thought to the future of your business. Perhaps you’re thinking of selling your business or retiring, or you’re planning ahead for a successful handover.
If that’s the case, succession planning is not only something you should know about but be actively engaging in to ensure the best outcome for yourself and your organization.
Simply put, succession planning is the process of getting your business’ future in order. This could be hiring your replacement or setting up your business for sale.
We talked to three experts who shared their experience with succession planning; they understand how important it is in today’s climate.
Sarah Casorso: Senior Manager of Employment Programs and Human Resources, ECO Canada. Casorso has over a decade of experience helping businesses translate their long-term vision into human resource activities – from hiring, training, and retaining the right people.
Russell Wintersgill, Managing Director of Wintersgill and Associates. For over 30 years, Wintersgill has guided businesses through succession planning. He helps solve problems, maximize growth, and improve business performance.
Robert Welke: President ofProACTv Business Solutions Inc.. Through ProACTv, Welke and his associates offer a variety of programs including Maximizing the Value of your Exit (MExit) — a framework for helping business owners successfully prepare their companies for a high-value, future exit. Welke has over 30 years of experience in strategic business development, starting, growing and selling businesses, along with coaching, leadership, and mentoring experience.
What are succession planning trends?
According to 2019Canadian Industry Statistics, there are 2,126 environmental consulting businesses in the country. How many of them have a solid plan in place? Robert Welke provided some eye-opening statistics, via the Business Development Bank of Canada, The Canadian Federation of Independent Business, the Ontario Government, and the Exit Planning Institute:
80% of businesses that are put up for sale don’t sell.
Of the 20% of businesses that do sell, 10% sell successfully and the other 10% sell for less than what the business owner desired.
66% of small businesses close down when the owner retires.
Let’s go back to the number of environmental consulting firms: 2,126. If we use that as our base, according to the statistics above, it could mean:
1,700 businesses won’t sell.
452 businesses sell. Of those 452 businesses, half sell successfully while other half don’t sell for what the owner wanted.
1,424 businesses close their doors once the owner retires.
Why are these trends happening? A big part of it is a lack of understanding of the time to do succession planning. The good news is that there are resources that can help set you up for success.
Why does succession planning matter?
It grows your bottom line
“If you’re not hiring someone smarter than you to take your role, you’re in trouble,” says Russell Wintersgill.
“You need time to look at your business at the 30,000-foot level. This means training a successor that can help you handle day-to-day work. From there, you can do the strategic business development that goes right to your bottom line.”
It has a positive social impact
Sarah Casorso pointed to the potential for youth employment. “Theunemployment ratefor youth under 25 is high,” she says. “Businesses could hire someone out of university and train them for future roles. ECO provideswage subsidies to mitigate risk for employers.”When businesses plan for the future, this often means staying in operation. The benefits of that go beyond the employee.“If a business closes, people often leave,” Welke says. “It not only impacts families but also communities and vendors that benefited because of that business. Succession planning keeps that positive economic loop going.”
It attracts buyers
This is especially important if you plan to sell your business. Welke says in addition to clean financials, cash flow, and how independent the business is of its owner, buyers look for “conscious” businesses.
“They’re looking for companies that care about more than just making money,” he explains. “They want to see how the business addresses environmental, social, and governance issues. That’s called ‘ESG’ and is a measure of how conscious a business is.”
It helps you recruit and train the right people
Succession planning is an opportunity to reflect on what powers your business; your people.“Sometimes you need to look at who to hire for now and down the road,” says Casorso. “OurHR Services program provides environmental small-to-medium-sized enterprises customized human resources support.”As an example, Casorso shared that an organization used ECO’s HR Services to hire a youth employee. HR Services helped the organization get funding for the role and write a compelling job description.“It’s about helping our clients find the right resources,” she says. If HR is not in your wheelhouse, or you don’t have an internal resource dedicated to recruitment and people management, then it’s worth the investment to bring in outside expertise.
How do you start succession planning?
For Wintersgill, it starts with businesses realizing they need to do it.“That often comes when I ask my clients, ‘who looks after things when you’re not around?’ or, ‘when was the last time you took a vacation and unplugged’”, he explains.This means letting go.“That’s a tough thing for business owners to do because they have to recognize mistakes will be made and they’re still responsible for the outcomes,” he said. “This means helping them identify and invest in the internal employees who could be in the future roles.”Wintersgill suggests taking the time each year to look at your organizational chart. This will help you see who could be interested in upcoming roles by who has progressed or moved to different departments. Welke feels the ball gets rolling with the “why?” Business owners need to understand why they’re doing succession planning. “That goes back to their strategic plan; where they are now and where they want to be,” he explains. “Their strategic plan helps them with succession planning steps by identifying the roles they will need in the future. It also helps them clarify human capital development needs — such as recruiting, training and mentoring — in order to meet their plan.”
Where can you get succession planning support?
If you’re wondering where you’re going to get time to do all of this, that’s ok! That means you’re already considering the next steps, which is a move in the right direction.Here are a few ways to get support:
Reach out to fellow environmental leaders or business owners. If you have an Environmental Professional designation, log into yourECO membership portal. That will show you a roster of environmental professionals that you can connect with.
Hire succession planning leaders. Experts like Wintersgill and Welke can guide you through building and executing succession plans. You can also find more consultants in this area on the Business Development Bank of Canada website.
Contact ECO’sHR Services team. They can help you recruit and retain the right people for your business. They also design custom HR solutions for businesses.
As the quote goes, “the journey of a thousand miles begins with a single step.” We hope you’ve learned some ideas to get you going on your own succession planning journey!Links to additional information