For many contractors, succession planning is a crucial yet often overlooked or delayed conversation topic. Discussion of a successor means relinquishing control, planning for a sale of a business that you have overseen, and inherently trusting another with one of your most valuable assets. 

However, construction company owners who have dealt with ownership transitions recognize that succession planning is wisely invested time. Strong management succession will increase the business’ value and set the stage for the next generation of leadership, in addition to providing other benefits.

In many other areas of a company, it’s not uncommon to establish formal processes and plans to reduce cost and uncertainties and build value. Succession planning should be no different. The succession planning process can be broken out into four primary steps, outlined below.

Identify the Key Players & Set Goals
First, identify key decision-makers and determine the plan goals. During this time, the following information should be gathered:

• Who are the current owners and who should be involved in planning?
• What is the transition timeline?
• What legacy does the owner wish to leave behind?

Common topics among these discussions usually include future financial security, financial stability for dependents, maintaining family ownership, and treating dependents equitably.