The Critical Role of Succession Planning
Business succession is one of the most overlooked yet essential elements of long-term business success. Our white paper, Succession Planning: Bridge Builders, explores the necessity of both business and internal succession planning. It highlights that businesses must construct a clear succession plan to safeguard their legacy, ensure long-term growth, and maintain stability.
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Drawing inspiration from historical bridge builders who shaped entire cities, the report likens succession planning to constructing a bridge—connecting today’s business to its future. Without a structured plan, businesses risk losing value, encountering operational disruption, and facing leadership voids that can jeopardise long-term success.
Why Succession Planning is a Business Imperative
The “Grow or Die” Mentality
The Harvard Business Review's Five Stages of Business Growth identifies a key philosophy: grow or die. Businesses that fail to plan for the future risk stagnation and decline. Succession planning is not just about leadership replacement but about sustaining business momentum and ensuring continuous value creation.
The Current State of Succession Planning
Research shows that many businesses fail to execute effective succession plans. The statistics are alarming:
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Only 30% of family businesses survive into the second generation.
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A mere 10-12% make it to the third generation.
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Just 3% continue into the fourth generation or beyond.
These figures indicate that businesses, particularly family-owned enterprises, struggle to sustain leadership and operational continuity. The core issue lies in a lack of structured planning and strategic foresight.
Understanding Business and Internal Succession
Succession planning consists of two key components:
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Business Succession – The transition of business ownership through sale, family inheritance, or internal promotion.
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Internal Management Succession – The development of internal talent to step into leadership roles over time.
The white paper stresses that linking business succession with internal succession is critical to long-term success. Without internal leadership development, a business cannot sustain itself post-ownership transition.
The Key Challenges in Succession Planning
1. The Missing “Why”
One of the most common mistakes in succession planning is failing to ask why a succession plan is needed. Businesses must consider both push factors (e.g., an ageing owner, industry shifts) and pull factors (e.g., new growth opportunities, investor buyouts).
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If the purpose of succession planning is unclear, the plan itself can become ineffective, leading to poor decision-making and suboptimal outcomes.
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2. The Failure to Balance Business as Usual with Strategic Planning
Many businesses struggle to implement succession plans while maintaining ongoing operations. This results in one of two extremes:
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Over-prioritisation of daily operations causes succession planning to be neglected.
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Too much focus on transition planning leads to instability in business performance.
A well-structured succession plan must balance short-term operational needs with long-term strategic objectives.
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3. Lack of Management Readiness
Succession planning is not just about replacing an owner or CEO—it requires developing a pipeline of capable leaders. Unfortunately, many businesses fail to prepare managers for senior leadership roles, leading to skill gaps and leadership deficiencies.
The Three Stages of Effective Succession Planning
The white paper outlines a three-stage framework to create a successful succession plan:
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Stage 1: Understand the Goal
Before implementing any succession plan, businesses must clearly define their objectives. This includes:
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Identifying the ideal future state of the business.
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Understanding whether ownership transfer, leadership development, or both are required.
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Analysing business continuity risks to ensure operational stability.
A common mistake is assuming that succession planning is only for retirement purposes. It is about building a resilient business that can thrive beyond its current leadership.
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Stage 2: Develop a 90-Day Plan
Succession planning should begin with a 90-day action plan to establish immediate priorities. This includes:
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Identifying key leadership gaps.
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Mapping out talent development strategies.
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Ensuring business continuity during the transition.
This structured approach prevents succession planning from becoming an abstract, long-term concept and turns it into a tangible, actionable process.
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Stage 3: Implement the Internal Management Succession Plan
Once a foundation is set, businesses must actively develop and transition leadership roles over time. This includes:
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Leadership training programs to prepare internal candidates.
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Clear governance structures to ensure transparency in decision-making.
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Regular milestone reviews to track succession progress.
Unlike business succession (which can be a one-time event), internal succession is an ongoing process that must be nurtured continuously.
Outcomes of a Successful Succession Plan
Depending on a business’s strategy, succession planning can take different forms:
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1. Stepping Up
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Growth-focused succession where leadership is actively enhanced to expand the business.
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This may include acquisitions, new market expansion, or scaling operations.
2. Stepping Back
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Partial transition of ownership, such as selling shares while remaining involved in strategic decision-making.
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Often involves professionalising management teams to maintain operational efficiency.
3. Stepping Out
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Full ownership transfer, whether through sale, buyout, or leadership transition.
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Requires careful planning to maximise business value before exit.
Succession Planning Process: Building a Bridge to the Future
A well-structured succession plan:
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Safeguards business continuity
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Develops future leaders
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Maximises the value of business assets
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Ensures a seamless ownership transition
Too many businesses delay succession planning until it becomes urgent. The Succession Planning: Bridge Builders white paper underscores that proactive planning is the only way to protect business legacy and secure long-term success​.
For business owners, the time to build this bridge is now. By preparing today, businesses can stand strong tomorrow.
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Is HR consultancy a viable career choice?A study in 2016 by the Australian Human Resources Institute said that out of 437 HR professionals, about 85% were satisfied or happy with their work. It is true that HR is often at the core of frustrating conflicts in a business and there are a number of challenges- like with all other businesses and departments. ​ However, with the increasing number of small to medium-sized businesses in Australia and a growing number of people who prefer to use outsourced consultancy services as opposed to hiring full-time staff, HR consultancy is a very promising career choice.
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Can you open a consulting firm without HR experience?Getting into HR without prior experience or education is common and many people discover that they particularly enjoy it once they are in the field. However, opening a consulting firm without prior experience may be a bit tricky and risky. ​ First of all, your clients may want to see some certifications or endorsements of your experience before they hire your firm. ​ Additionally, it is important to know how to grow a network and manage different aspects of a business before opening one. Since many issues in HR can get technical and frustrating, it is advisable for you to have some sort of training before you start working as a consultant and providing services.
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