What are the most important ingredients to building and running a successful business? Having a viable idea is part of it, creating a solid business plan and understanding financial implications is just as important. Perhaps the most critical aspect revolves around timing: knowing what and when to let go of (part of) your business can make or break your company. This applies to both succession planning for tech startups and delegating. Here is a closer look.
Understanding What You’re Planning For
In most successful startup journeys, there comes a time when the workload outgrows what a single person can do. In fact, the moment you need to let go might arrive even earlier if you need access to a specific skill set. When that’s the case, founders need to let go of at least part of their work and delegate it to someone else. Miss that moment, and you may end up holding back your own business.
As the company matures, it’s time to think about another scenario: What happens when key staff members leave? Whether it is to retire or take up an opportunity elsewhere, losing members of your leadership team or other key people puts the company at risk. For that reason alone, you need to start succession planning sooner rather than later.
Planning for Growth
Many successful startups begin with little more than an idea jotted on the back of a napkin. As the idea turns into a fledgling business, you’ll likely need an office or another facility. As you attract more clients, your income grows, and your diary will fill up. That’s a great sign because it shows that your idea is viable.
Now is the time to start planning for growth by looking for people to join your company. You may not be ready yet to offer full-time employment, but there is nothing stopping you from connecting to people that may be a good fit or asking for recommendations for the future.
Once the time comes to expand your team, remember that bringing in top talent does mean letting go of some of the work you’ve become accustomed to. That can be hard at first, especially if you’ve been working alone for a while. I recommend persevering and allowing your new hires to fill and expand the roles you hired them for.
Don’t be afraid to ask for feedback. Many founders tend to err on the side of micromanagement initially. Avoiding that trap will save you time and prevent losing the people you just hired.
Succession Planning
In March 2024, then-Taoiseach Leo Varadkar said: “One part of leadership is knowing when the time has come to pass on the baton, and then having the courage to do it.” The sentence was part of Varadkar’s announcement that he would step down. While the example may be drawn from politics, the same sentiment applies to tech startup businesses.
Many founders become serial entrepreneurs, meaning they may be looking for their next project within a few years. When that moment comes, it’s critical to make the transition as smooth as possible for the benefit of the business, its employees, and customers. That is what succession planning is for.
Startup succession planning means preparing for changes in leadership and other critical roles in an organisation. It may sound complicated but doesn’t need to be. Let’s break it down into three steps:
- Pinpoint key roles: start by identifying the roles that are critical to your company’s well-being. In large businesses, these would be the ‘C-suite’ positions, but don’t overlook other important roles and people without whom the company would struggle at least temporarily.
- Find potential successors: nurturing internal talent is a great option, if you have enough notice. Where possible, involve the people leaving the company or moving on to other positions to transfer as much of their knowledge as you can. Alternatively, start looking externally and consider reaching out to potential new staff members to build a talent pipeline.
- Involve your team: your current team members may be the best source for potential successors. Most professionals have a network of peers that they can tap into. The added benefit is that your potential successors have already been vetted to some degree.
When it comes to succession planning, there is only one thing you can do wrong – not planning at all. Even if you’re planning to close your company, perhaps for retirement, succession planning is important. Letting your clients and your suppliers know about your plans may carry the risk that clients are looking for an alternative supplier. Nonetheless, it’s the fair thing to do.
Notifying suppliers early allows them to plan ahead for their own business needs. Depending on the volume of business, your decision to wind down might have a significant effect on them.
A Personal Note
Speaking of retirement, this may be the right moment to let you know that it’s time for me to think about my own retirement. Long ago I learned from downhill skiing that the best time to stop at the end of the day is just before the “one last run” run. With that in mind I am stepping back from active CFO roles as of 1st July. I may still be available for the odd special project after that but a long holiday in July beckons then helping Mel to transition to being a retired doctor.
Did I plan this? Yes, all my clients have known since October last year to give them lots of time to get used to the idea, and this has worked well. Some have taken longer to find a replacement than others but no one is irreplaceable and everyone has found a satisfactory solution for their needs.
I’ll still be around for a while, but eventually I’ll slip out of the door un-noticed and head for a small whitewashed cottage in Wester Ross. If you drop by there might be a dram waiting.