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Every business owner knows the merits of succession planning. But they should be finding answers for a raft of possible scenarios. Image Credit: Shutterstock

In my business, I meet business owners of all ages, all the time.

Some are founders, some are the second or third generation family members owning and running the business. I put this question only to those whom I think will not take offence at this question that can be quite disconcerting – ‘Think hard, would you say your company is truly, professionally managed?’

Most times I get a wishy-washy answer – some mumbling response between a ‘yes’ and a ‘no’. Invariably, after a few more questions, the answer veers towards a ‘no. Putting this test to yourself could help you and your company, so ask yourself 8 simple questions and see how you fare.

These constitute a sort of litmus test – there are many more questions that can be asked, but I put these together from recent experiences.

First, will or how long will your company survive if you’re run over by a bus? Most first-generation owners still running their companies at 75 years, with their 45-year-old son or daughter completely powerless, think they are immortal.

Sumner Redstone, Rupert Murdoch, Warren Bufffet… the list is long. Some businessmen friends, well into their seventh decade, have even told me that it is ‘good to keep the boy under control’.

So, if the answer to this question is that it will collapse overnight or in 6 months, you have a problem.

How well do you prepare for risk?

Second, will your business run smoothly if you go off for a months’ vacation with no phone, internet or fax? An honest answer is tough, because if the company you think will limp along with meaningful decisions all held up for your return, that is not your ideal answer.

Third, have all the major risks in your company been identified, addressed and mitigated? Some examples - Key man risks, legal risks, customer or supplier risk, banking and financial risk? Even if not fully mitigated, identification is a great first step. Have they?

Fourth, how many direct reports do you have? If you have more than eight or nine, that is symptomatic of poor or nil delegation of authority and is obviously undesirable.

Competence or loyalty?

Fifth, is your second line of management, if any, comprised of managers there due to competence or loyalty? The former is a great answer, the second is even better if loyalty is coupled with competence. If not, you have a serious problem…

Sixth, what percentage of your time do you spend on growing the business vs. making minor decisions? If you do an activity tracking analysis for a week – of how you spend every hour and analyse the results, it should be revealing. You can even dump your data into ChatGPT 4.0 and it will do the needful for you!

Seven, do you have meetings with your employees to seek their opinions and even if you do, does anyone other than you speak? I know at least two business owners who do have meetings. But they are used to berate and browbeat employees to work harder!

Eight, how high or low is staff attrition at your firm? If high, do you know why? If you are proud of it being low, is it because yours is a great place to work or do you have such duffers who simply cannot find other jobs?

This simple test is worth taking. Honest answers can be revelatory. It takes a brave man to be honest and an even braver man to gird his loins and fix the problems he knows he has.