When entering any business arrangement, including real estate partnerships, it is important to consider all potential future business changes. As time passes and the dynamics of your business change, a judicious succession plan can streamline the process of leadership changes, saving resources in both time and money.
A succession plan is a written document that outlines how one leader will replace another within a business. Leadership positions are commonly filled internally, with individuals with strong business acumen and experience positioned to evolve into the leadership positions successfully.
Leadership transitions are a great indicator of the strength and overall health of a business, proper management of the leadership change and the fashion that leaders exits the business are vitally important. A carefully designed succession plan reduces the risk for any potential conflicts associated with the change. Further it can increase the capability and availability of well-trained employees that are prepared to assume leadership roles.
Conversations with CEOs from across the real estate industries recently have revealed a disproportionate lack of preparedness for succession planning. While many firms have succession plans in place, few of these plans contain the necessary ingredients for proven success.
The following are important points to considering when designing your succession plan:
- Set standards and criteria:
- Develop standards concerning which characteristics are essential in leading your real estate business. During this consideration phase consult business advisers, industry contacts, and other important business partners/peers for perspective and input. A proper succession plan includes potential candidates to replace you, any real estate partners’, and all other positions of leadership within your agency. Develop expectations and standards for your succession plan early in the development of your business so you can strategically train and develop employees accordingly. Create a list of necessary and preferred qualifications, and consider the benefits of various skillsets and backgrounds.
- · Assess internal candidates.
- As you develop your criteria and succession plan is it vital to strategically and continually train and mentor other real estate professionals within your business.
- Observe their positive qualities, as well as characteristics that may hinder their leadership abilities. Both hard and soft skills are vital when considering individuals for leadership positions and a balanced approach to the choice of people with complementary skills based on the dynamics of your business is vital. Consider all candidates and try to view the situation objectively.
- · Prepare potential candidates.
- Integrating a plan to train and develop potential succession candidates is vital and often neglected or implemented improperly. All candidates require mentoring and training to assume a leadership role. Provide candidates resources, support, and motivation to learn, grow, and develop their capabilities to assume larger roles with more responsibility. Communication and shared values are key when developing and motivating employees.
- Consult business advisers and mentors:
- You know your business better than anyone, choosing your leaders depends on your perspective and objectives. While choosing future leaders for your company is done by you, professional advice is critical in making proper decisions and developing a flawless succession plan.
- Further, an objective perspective can also be beneficial in your considerations. A top-tier CPA and business adviser can help you analyze potential profitability of a candidates, make suggestions investment decisions for growth and training and offer advice/data regarding best industry practices.
- Succession planning involves many issues and multiple transfer strategies. Transfer strategies involve estate planning, asset protection in case of divorce or general creditors, income taxes, and estate taxes.
- Continually develop and optimize:
- Succession leaders have a plan, and they review it on a regular basis. Successful firms build a steady pipeline of talent by effectively assessing and developing rising leaders. Your succession plan should be revisited and revised as market conditions, business strategies, and employees change/develop.
- Competencies and experiences required for the next leader and currently possessed by employees should be observed and updated. Plans to bridge the gap between required and current skill-sets is vital – up to date snapshots ensures your plan is on track. Provide a formal development plan for high-potential employees. Provide rising leaders with targeted development experiences to help them rise to the next level.
Succession planning is important for protecting the future of a company for its investors, employees, and/or its successor-owners. Succession leaders bring a future-focused orientation to their succession plans by developing a strong succession plan now that can help ease the transition of changing roles down the road. A company should view succession planning as vital and urgent to business strategy not as an administrative issue is not highly prioritized. Strong succession plans include transition timetables for their overall plans and employee development.
To assist real estate firms in optimizing their succession planning efforts, Camuso CPA offers a series of strategies to develop and tailor a first-rate succession plan to your business needs. We are the people to call to develop a Charlotte real estate succession plan. In addition to a succession plan, you should develop an exit-strategy to further ease any future transitions within your business.