Succession planning for SMEs

Succession planning is a crucial aspect of business strategy that often goes overlooked, especially in small and medium-sized enterprises (SMEs). Proper planning ensures a smooth leadership transition, maintains business continuity, and preserves the legacy built over the years.

In this blog, we will explore the importance of succession planning for SMEs, the steps involved, and how we can assist in creating a robust plan.

The importance of succession planning

Succession planning is about replacing key individuals and preparing the business for the future. This is particularly vital for SMEs due to their often closely-knit structures and reliance on key personnel. According to a report by the Institute for Family Business, only 30% of family-owned businesses in the UK survive into the second generation, and just 12% make it to the third. These statistics highlight the necessity of having a well-thought-out succession plan.

A robust succession plan can mitigate risks associated with unexpected departures, such as illness or sudden resignation. It also ensures that the business remains attractive to investors and lenders, who see a clear plan for future leadership as a sign of stability and foresight. Furthermore, it helps retain talent within the organisation by providing clear career progression paths.

Steps to effective succession planning

Identify key positions and potential successors

The first step in succession planning is identifying the roles critical to the business’s success. These are often senior leadership positions but can also include roles with specialised skills. Once identified, the next step is to pinpoint potential successors. These individuals can come from within the organisation or be external candidates.

Assess competencies and skills

Evaluating potential successors’ skills and competencies is essential to ensuring they are prepared for future roles. This assessment should consider technical abilities, leadership qualities, and organisational cultural fit. Regular feedback and performance reviews will help in this process.

Develop a training and development plan

A tailored development plan should be implemented once potential successors have been identified and assessed. This plan may include formal training, mentoring, and on-the-job experience. According to a survey by the Chartered Institute of Personnel and Development (CIPD), 76% of UK organisations use mentoring as part of their leadership development strategy, highlighting its importance.

Communicate the plan

Transparency is key to a successful succession plan. Communicating the plan to all stakeholders, including employees, board members, and potential successors, ensures everyone is aware of the process and their role within it. This transparency builds trust and reduces uncertainty within the organisation.

Regularly review and update the plan

A succession plan is not a one-time effort; it should be regularly reviewed and updated to reflect changes within the business and the broader market environment. This ongoing review ensures the plan remains relevant and effective.

Common challenges in succession planning

Despite its importance, succession planning for SMEs often faces several challenges. One common issue is the reluctance of current leaders to let go of control. This can be particularly prevalent in family-owned businesses, where strong emotional ties to the business exist. Another challenge is the lack of suitable internal candidates, which may necessitate looking outside the organisation.

Financial constraints can also pose a challenge, as investing in training and development requires resources that some SMEs may find difficult to allocate. However, the long-term benefits of a well-prepared leadership transition far outweigh these initial costs.

How we can help

At Venthams, we understand the unique challenges SMEs face in succession planning. Our team of experienced professionals can assist you in developing a comprehensive succession plan tailored to your business’s specific needs. We provide a range of services, including:

  • Identifying key positions and potential successors
  • Assessing the skills and competencies of potential candidates
  • Developing customised training and development programmes
  • Facilitating transparent communication of the succession plan
  • Regularly reviewing and updating the plan to ensure its ongoing relevance.

We work closely with you to ensure a seamless leadership transition and safeguard your business’s future. With our support, you can focus on what you do best—running your business—while we plan.


Succession planning is a critical component of business strategy, particularly for SMEs. Businesses can ensure a smooth leadership transition and maintain their legacy by identifying key positions, assessing potential successors, and developing a tailored training plan. While challenges exist, the benefits of effective succession planning are undeniable.

At Venthams, we are here to help you navigate this essential process and secure your business’s future.

Contact us today to learn more about how we can assist with your succession planning needs.

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