This is the fourth of a short series of Fishing Today articles on succession planning – the process of ensuring the continuity of your business when the time comes for you to move on to do other things. In this issue, we look at some main considerations when deciding how, and to whom, you will transfer leadership of your business.

One of the most important decisions you will make in implementing your succession plan is deciding who will lead the business once you've moved on. You really have three main options in this regard:

• Promote an existing employee in the business;
• Recruit an external person for the position; or
• Pass leadership on to a family member.

Each option has its positives and negatives – and these will vary depending on the circumstances of each individual business. The availability of suitable candidates and associated costs must also be considered when deciding on a candidate.

Choosing a suitable leadership candidate is very important for a successful business succession. The decision should be carefully considered, as it will greatly affect the success or failure of the business once you have moved on from day to day operations. If one of your goals is to receive an income stream from the business after retiring, you must ensure that your business is left in capable hands. Passing leadership to someone who does not have the right skills and knowledge will be detrimental to the business and could affect dramatically your post-business goals and plans.

It's important that you consider all candidates for the job, even if initially you would prefer to look at just one option.

For example, even if you want to keep business leadership in the family, you should still consider internal and external candidates as there may be a more suitable person for the job outside your immediate family. If you fall into the trap of only considering candidates from one particular group (i.e. internal, external or family) you may overlook the most suitable candidate for the job: which could be disastrous both to the income stream you'll receive post-succession and to the value of the business.

To help make this choice objectively, it can be helpful to list carefully the skills and knowledge that the business needs in a leader (especially remembering that relationships with suppliers, customers and employees must be maintained and strengthened during the new business phase). Next, you can make a detailed list of the advantages and disadvantages of recruiting people from each of the three options. These lists can then be used to evaluate the suitability of each candidate identified. Choosing a leadership successor will have a very significant impact on your business. Passing the leadership to someone unsuitable will have a negative effect on operations. However, spending time and effort choosing the right candidate (with the necessary skills and knowledge) should allow the business to grow and develop its operations. For this reason, making the right choice in the candidate for leadership is one of your most vital decisions in the context of your business succession plan.

Tom Lewis manages the Seafood and Food Manufacturing Programs for Rural Development Services and can be contacted on 03 6231 9033 email This e-mail address is being protected from spam bots, you need JavaScript enabled to view it