Effective succession planning in the built environment

Written by Peter Jubb, TC Group Business Development Consultant

What’s ‘Succession Planning’?

To give this context, it’s important to consider the ambitions and needs of business owners, together with where the company needs to get to, taking into account the financials, people, technology and processes.

Of course, there needs to be a strategic plan in place to drive things forward, and consideration given to how the current owners wish to transition their role or exit the business via one of the following routes.

TC Group works closely with business owners to expertly prepare and execute successful exit strategies, helping owners to compare options and decide on the most appropriate, and desirable, exit route. To feel prepared and confident about your succession plans, speak to us about an Options Review.

It’s important to recognise that succession planning can start at any point during a business’s evolution; the earlier the better. The trap is to avoid leaving it too late only to find out that the business isn’t worth what you envisaged, or that your senior management team don’t have the appetite or skill sets necessary for your preferred succession route.

Imagine a business that has five directors of similar age who are all looking to exit at the same time; what financial shape does the business need to be in to do this? and is this realistic given current timescales?

Many SME businesses in the construction sector follow a similar pattern of development.

The businesses were started by a single person or a small group of like-minded people but with different skills sets, not necessarily in a technical sense, but in relation to other critical business functions.

  • Strategic Planning
  • Finance
  • Business Development and Marketing
  • Systems and Processes
  • Leadership skills
  • HR

Business owners of 20/30 years ago were prepared to take risks and put things on the line to get the business moving. The generation of today are much more risk averse, which is one of the reasons for the rise in the popularity of an Employee Ownership Trust model being adopted, offering a more cooperative style of succession.

One of the things that’s self-evident from our interaction with hundreds of SME businesses in the construction sector, is that the owners remain primary work generators for a long time and are the custodians of key client relationships. Work that’s generated by the owners is then passed to the senior management team and their teams to deliver.

This is where you begin to see a divide emerging.

The client relationships are not being transitioned correctly from owner to the senior management team, work generation not being shared, and strategic planning is not inclusive enough and needs to involve the senior management team.

The impact on succession planning therefore, largely depends on when the current owners get to grips with bringing the next generation through. They need to identify key individuals who want to be future leaders and business owners.

It also depends on the scale of the business that needs to be created, enabling the owners to ultimately exit at a time of their choosing, with the rewards they’re expecting.

If the key to effective succession planning is bringing your team with you and helping owners to share the load of critical business functions, a great place for owners to start is by applying a process of assessment. We have developed the following model to get owners thinking and planning.

Availability – is in-house or external recruitment required ?

Aptitude – who has the skillset and  appetite to become a business owner?

Alignment – are the senior management team involved in the business strategy? 

Action – is there a succession plan in place? What plans are in place to embed business skills into the senior management team? 

 

If you are an SME business owner in the construction sector and would like a no-obligation discussion about your succession plans and business development goals, book a free 30-minute consultation with our team today.

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