Strategic Planning and Risk Management for Business Continuity

Strategic planning and risk management are vital for safeguarding the future of any business. And with many privately held businesses expected to transition ownership in the coming years, such planning is especially important to protect the owners’ business value, personal assets, and family from the unknown.

Learn what steps to take now to better prepare your business for succession and a smooth leadership handoff.

Key elements of strategic planning for businesses

Business strategic plans can incorporate a wide variety of analysis and goals individualized for your industry, business type and size, and personal circumstances. But there are key elements all business strategic plans should incorporate. Consider a few that are sometimes missed.

Succession planning

Preparing for succession is not just about identifying who will take over. You also need to train that person or team to be ready and capable. Effective succession plans incorporate strategies for successful transitions and identify critical roles, assess current talent, and set a development path for future leaders.

Personal and business risk assessment

Regularly assess both personal and business risks, including economic downturns, key personnel losses, and cybersecurity threats. Knowing your risks and their potential impact helps you create a plan to quickly react to and navigate challenging situations.

Business continuity plans

These plans should address a wide range of potential disruptions, from losing a significant customer to facing natural disasters. Having a business continuity plan allows operations to continue with minimal disruption.

Planning for business succession

While strategic planning is important to help guide an organization toward its long-term goals, succession planning is critical for maintaining the legacy and longevity of a business. Proactive succession planning can lead to better outcomes and help boost the financial independence of business owners.

Steps to effective succession planning

Identify successors early

Engage potential successors in the business early so they are prepared to take over when the time comes. This allows for the transfer of important institutional knowledge, maintaining smooth operations during leadership transitions.

Create a development plan

Provide training and development opportunities for successors to have the skills needed for leadership. Align their development with the organization’s strategic goals.

Regularly review and update plans

Succession plans should be dynamic documents reviewed and updated regularly to reflect changing circumstances.

Get additional business succession insights with our Owner Legacy Webinar Series. Watch it on-demand now.

Preparing for the unexpected

Whether it’s a natural disaster, a market crash, or a personal crisis, you need to be prepared for the worst-case scenarios. Robust planning helps reduce their impact on your financial well-being — both for you personally and for the organization.

While succession planning is key to prepare for future uncertainties that could disrupt a leadership transition, a cybersecurity plan can help you plan for unexpected technology and scam-related issues that could disrupt your operations.

Cybersecurity and financial scams

Cybersecurity is a significant concern for businesses. With the increasing reliance on technology, the risk of cyberattacks is higher than ever. Consider these strategies to boost your business’s cybersecurity.

Implement strong security measures

Use strong passwords, multi-factor authentication, and regular security audits to protect business systems.

Educate employees

Train employees to recognize and respond to phishing scams and other cyberthreats.

Consider cyber insurance

Cyber insurance can help mitigate the financial impact of a cyberattack but it’s not a substitute for robust security measures.

Planning considerations for family businesses

Family businesses can face additional challenges when it comes to planning and risk management. Family and business roles may overlap and there could be less structured governance structures. Coordinated planning can help mitigate these risks and provide a smooth transition between generations.

Estate planning

Proper estate planning can help the business remain within the family and reduce tax liabilities. With the looming potential expiration of the enhanced estate and gift tax exemption introduced by the Tax Cuts and Jobs Act, individuals and families must act swiftly to capture its benefits. Explore various strategies that can help you protect wealth, provide for loved ones, and achieve long-term financial goals. 

Addressing family dynamics

Open communication about roles, responsibilities, and expectations can help prevent conflicts and misunderstandings.

How CLA can help with strategic planning and risk management

By understanding the interconnectedness of personal and business risks and taking proactive steps to address them, business owners can help provide continuity for the organization and protect their legacy.

An integrated strategic and risk management plan allows you to create a robust framework to help provide for business success and stability during leadership transitions. At CLA, we’ve advised business owners in many industries on creating successful strategic and risk management plans. Explore our comprehensive owner legacy services to learn more. 

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