Business Succession

Succession planning is the process of identifying and preparing suitable employees through mentorship, training, job rotation and organizational involvement to replace key players, while supporting the continuation of organizational knowledge and culture as older employees retire and leave the organization. Without proper succession planning, the future success of the business is often left to chance. For example, it may cease to be competitive or attract new talented and qualified individuals. 

 

Statistics show that three-quarters of small business owners do not have a business succession plan. Furthermore, only 30% of family-owned businesses survive into the second generation and only 12% are still viable by the third generation. 

Succession planning is particularly critical to the co-operative sector because in addition to identifying and developing future employees, the very culture of co-operation, the history of the movement, and the co-operative advantage must all be shared and passed along. The key thing about succession planning is that it is most useful - and will provide the best results for your co-operative - if it is an ongoing and active process that the board has made a commitment to develop.

There are many ways to develop and achieve a successful succession plan. Two key considerations for every co-operative include:

1. Emphasizing the importance of education - for your board, staff, members, youth and the general public - as to what it means to be a co-operative.

2. The meaningful engagement of youth in your co-operative, be it through representation on your board of directors, employment, or connecting with them through technology;

Refer to our FactSheet on Succession Planning for more tips!

A Viable Co-operative Solution!

There are two main options for succession: business owners sell off their business to their employees, or people in a community can jointly purchase a business and continue to offer its products and services.

By adopting the co-operative business model, employees and/or community members improve their chances of success! Co-operative businesses are known to not only succeed at a higher rate than traditional forms of business, but succession is often more sustainable over the long-term. This is not the case in the private sector, where approximately one-third of all business closures are the result of succession failures and lack of preparation. 

To learn about the necessary conditions for a co-operative succession strategy, as well as the eighteen steps for the successful transfer of a privately-owned business to a co-operative, read the Small Business Succession: A Challenge and an Opportunity.

To learn more about succession planning within a co-operative context, consult our FactSheet on Co-operative Business Conversions. It will provide suggestions and examples that move succession planning from a mere "buzzword" term into actual implementation through concrete action.  


Another great read on co-operatives and business succession: