Finding your replacement now will help later

But the fact is, there will never be a good time to think about succession planning unless you make the time, say experts.

"Succession planning is one of those things that when times are good we say we don't have time for, and when times are bad we say we don't have money for it," says William J. Rothwell, author of "Effective Succession Planning" (Amacom, $65) and professor of workforce development at Penn State University. "The result: We don't do it."

Less than 50 percent of U.S. firms are prepared for the sudden loss of their senior leader, says Rothwell, president of Rothwell & Associates Inc. 

Plan ahead
Sudden loss leaves many businesses vulnerable, which is why planning is so critical, say experts.

"A business should start preparing a minimum of five to 10 years in advance of the principal either slowing down, cutting back or retiring," says Elliot S. Schlissel, an attorney with offices in Lynbrook who assists companies with succession planning. And absolutely no later than when the principal is 65, says Schlissel, noting it takes time not only to pick a successor, but also to groom one.

To start, business owners should try looking for an eligible successor from within the firm, Schlissel says. If that isn't a viable option, they should alternatively look into selling the business, he notes.

Promoting from within is always a good first choice, particularly if you want some say in maintaining the company's vision or legacy, says Marshall Goldsmith, author of "Succession: Are You Ready?" (Harvard Business School Press, $18) and executive educator at the Marshall Goldsmith Group, a leadership education and executive coaching firm in Rancho Santa Fe, Calif.

"Look for people who you feel will fit the role of the leader of the future, not the leader of the past," Goldsmith says.

Avoid the "like me" bias, adds Rothwell. Some organizations have a senior team of look-alikes, he explains, noting, "diversity prompts creativity and innovation."

If you're a family-owned business, don't just assume your children will take over. They could either be ill-equipped or uninterested.

This wasn't the case for Larry Austin, chairman of Austin Travel in Melville, whose three sons, Jeff, Jamie and Stewart, hold key roles at the 56-year-old company. He started the transition more than a decade ago and said his sons have been well prepared for their roles, showing interest early on.

"The boys have been working here in different capacities for over 20 years," says Austin, who now focuses more on customer relationships then running daily operations.

They've had plenty of time to acclimate to their positions and develop relationships with key stakeholders, which is critical, say experts.

Consider shareholders
You must always consider how your successor will interact with key stakeholders (i.e. peers, customers, etc.), notes Goldsmith. Get feedback from them and see what the person does well and what needs to change, he suggests. Then work on developing that person, setting a transition time frame with measurable goals and benchmarks.

Start early, recommends Frank Sluter of the Satty, Levine & Ciacco accounting firm in Jericho, who is going through the succession process now.

Three years ago he became co-managing partner with the idea that he would head the firm when managing partner Roger Ciacco hit the mandatory partner's retirement age of 65. Sluter will take over as managing partner next January.

"You need time to relinquish some of the responsibilities," notes Sluter, who will be the 62- year-old firm's third successor.