Why You Need a Turnover Plan

Working with uber-successful clients constantly reminds me that change is a constant in business! The most successful businesses are living entities with many moving parts, so they transform day-to-day and over time as new employees are hired and owners near retirement.

I had lunch with a client recently who began to muse about when she’ll want to retire and perhaps pass her business to a family member or employee. “I can’t wait to have more time to myself, but I worry about my business and who will head it,” she said. “How can we make sure we maintain our reputation and the clients we’ve enjoyed serving for so long?”

By the time the cheque arrived, we decided she should start to plan now to make that transition happen smoothly in a few years.

As an OBM (Online Business Manager), I help business owners create and implement turnover plans that work for them, covering everything from who will manage the business and any roles in it, to ensuring strategic direction, policies and client information are left in good hands.

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A complete, detailed turnover plan is critical to the continued success of your business after you exit. Without one, whoever takes over will have to take months (maybe years!) of unnecessary lead time, just to get up to speed, losing valuable opportunity to bring in profit. When you have one, all they have to do is refer to the documents in it for valuable insight.

What is a Turnover Plan?

You develop a Turnover Plan to prepare to transition your role or company to a new person. There’s always a chance you may sell the business to an employee or external buyer, or that an employee will inherit your position.

Here are 4 Reasons You Need a Seamless Turnover Plan:

1) Make the transition of the business (or a specific role) seamless for you, your staff and your clients

When you think about the companies you do business with, what keeps you coming back? Most likely the people and the service. You know that no matter who you’re talking to, you’ll receive professional, personal and courteous service. Their staff knows you by name, and makes you feel special – you’re not treated like another invoice number.

The idea behind a turnover plan is the same. After you retire, your clients want to know they’ll receive the same high level of service, as if you were still at your desk every day. A plan ensures your successor has your client list, has access and knows who needs what, when. But keeping solid client relationships is also about the entire experience. Your plan would contain any and all important details relevant to the position or company, so anyone walking in would know what to do from the first day. Specifically, you’d include:

• Your company’s origin story

• Mission and Vision

• Future goals

• Current strategy you’re following to meet those goals

• Processes, procedures, and details (you do have processes and procedures in place, right?)

• Policies (Ethical, Human Resources-related, Workplace Safety, Financial, Technical, etc.)

• How-To articles

• Client and Vendor Lists

• Systems, Passwords and Technical/Security Information

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2) Planning lets you organize financing, work out taxes, and search for a buyer.

Establishing your goals will help you define what your transition path should look like, and feel less overwhelmed. Take inventory of what needs to be accomplished for a successful transition now, as these steps can take years to complete. Your process might include:

Seeking Advice

You’ll want to seek financial and legal advice, as well as communicate with your business partners, board (if you have one), and anyone else who needs to be in on decisions.

It helps to put yourself in your successor’s, or buyer’s, shoes. What would you want to know if you were buying a business? From their perspective, they’ll want to know the company has a solid foundation, that its mission and direction are well defined, and that your staff has the talent to execute them. They’ll also want to know the company’s potential for growth in your industry.

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Choosing and Preparing a Successor

Maybe you’d like to earn income after you retire, keep the company in the family, or even maintain a role in your business. How involved do you want to be once the transition is complete? This will impact which route you choose – selling to a family member, selling to employees, or selling to an external buyer.

Which skills, qualifications or expertise will your successor need, in addition to training specific to your business? Getting them comfortable enough to manage their new role could take years.

Carefully Define Transition Steps

When you transfer ownership, all parties should be intimately familiar with the business’ finance model, legal structure and valuation. You’ll also want to sort out financing, and a timeline for the transfer to take place.

Plan the Turnover

Because turning over your business is a dramatic change for all involved – yourself, your successor, stakeholders, customers, vendors, etc. – you’ll also want to build transparent and continuous communication into your plan so everyone is kept apprised of important updates.

Update as Needed

Your plan is a living document, just as your business is a living entity. Especially if you’re starting to plan years in advance, make sure you keep your plan up to date.

3) Be prepared if you need to exit suddenly

Sometimes, the worst happens to us as business owners. Maybe we’re involved in an accident, or fall ill. This plan should also contain an Emergency Plan. If you’re indisposed for any reason (for any length of time), this can save you and your business a lot of confusion and turmoil. It directs specific people on who needs to be contacted and which critical items need to be taken care of.

So, if/when you get sick, want to pass work to a sub-contractor or new employee, or just want to take the extra-long vacation of your dreams (or even if the worst happens), everything is ready! Having your processes and workflows complete from start to finish, or at least outlined, will help make the transition easier and less confusing for everyone.

4) Ensure your company’s continued success

We all learned in grade school that if we failed to plan, we could plan to fail. This is true in business as well. When you plan for what your business will look like during and after the transition, your successor can focus on maintaining momentum and reaching for even more ambitious goals than you’ve already achieved, instead of worrying about its security and stability.

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Your Turnover Plan may look drastically different from another entrepreneur’s depending on your business model, your internal structure, and client and vendor relationships. But getting started will leave you feeling more confident, less overwhelmed and better prepared for growth.

Need help creating or implementing a turnover plan to make the transition easy?

Let’s Talk!