Why Strategic Planning and Succession Planning Should Always Go Together

Kirsch CPA Group

Oct 01, 2024

Some small to midsize businesses engage in regular strategic planning, others let it fall by the wayside and adhere to a more “fly by the seat of our pants” ethos.

You probably wouldn’t be surprised to hear that, by and large, professional advisors strongly advise all business owners to undertake strategic planning at least once a year to assess where the company stands and chart its best course forward. And while you do that strategic planning, it’s also a good idea to evaluate the strategic objectives you come up with against your succession plan (assuming you have one of those).

The Anatomy of a Strategic Plan

First, let’s review some basics about strategic planning. Fundamentally, it’s an activity that helps:

Set priorities,
Focus energy and resources,
Strengthen operations,
Ensure that employees and management work toward common goals,
Establish agreement among leadership regarding intended outcomes, and
Adjust direction as the business environment changes.

Sometimes the best way to start is at the end. That is, define your ultimate goal: What do you want your business to accomplish? This essentially amounts to your company’s mission statement. So, if you have one of those, begin there and work backward: What steps will help the company fulfill that mission. And if you don’t have a mission statement, that would be an ideal place to start.

You don’t need a large number of objectives in a strategic plan. In fact, it might be best and most realistic to keep the number relatively small (say, under 10). For a strategic plan to have the most impact, the objectives should be clear and concise. Then outline the specific “action steps” under each that your business will have to take to fulfill them. Be sure to name someone who’s responsible for overseeing the completion of each objective and when it should be completed.

From there, set up “checkpoints” upon which you regularly evaluate the status of each action step, noting:

Progress made, including whether it’s completed and, if so, when,
Whether it resulted in fulfilling the objective, and
Whether you appear to be on track to complete all objectives.

There are, of course, many variations to precisely how companies go about strategic planning, but this is a common format. Keep in mind that your initially set objectives may not to change over the course of the year (or whatever fulfillment period you’re using) to account for notable changes to the economy, your industry or the environment in which your business operates.

A Road Map for Succession

Your succession plan should be part of strategic planning in one way or another. That is to say, if you don’t yet have a succession plan, you can (and probably should) make creating one a strategic-planning objective. After all, a company without a succession plan is at much higher risk of chaos, if not catastrophic failure, if something should happen to you or one of the other owners.

What’s more, by making succession planning part of strategic planning, you may be able to more easily put together a team to focus on it. You, your fellow owners (if you have them) and your professional advisors can all collaborate on tasks such as establishing a timeline, perhaps drawing up a buy-sell agreement and, if the time is right, identifying candidates to take over leadership of the company.

Now if your business already has a succession plan in place, first and foremost, well done! This is, as mentioned, a critical risk-management step. What you can do from here is, as you develop strategic objectives each year, determine whether and how they might affect your succession plan. Are you taking on too much risk if you’re nearing retirement and would be better off playing it safe until your heir takes over? Or, conversely, is it a good time to more aggressively expand the business to take advantage of opportunities in the marketplace that could, ultimately, benefit you when you are ready to retire or otherwise depart the company?

Ask for Help

For both strategic planning and succession planning, it’s helpful to have qualified professional advisors on your side. Kirsch CPA Group can be of great help in identifying strategic objectives and developing or refining your succession plan.

Schedule an appointment to learn how we can support you