02:40 PM PDT on Wednesday, April 6, 2011

There are many articles that talk about “succession planning.” Many of these articles are informative and offer valuable advice on how to develop a succession plan for your business. However, many owners of small to mid-sized companies still view themselves as invincible and shielded from adverse situations that would pull them out of their businesses for an extended period of time. I feel this way because of the hundreds of business owners I have coached who had no succession plan and were reluctant to address the topic head on.

I can remember the days when I also felt this way. That is until I was diagnosed with cancer last June. Six months of aggressive chemotherapy has kept me out of my business for more than five months, and the pending lung surgery and future chemotherapy will keep me away from work for another six months to a year. Yet, my businesses continue to operate and grow without me. Could you say the same, if you were put in the same situation?

I ask this question with a serious tone and challenge you to answer the question seriously, because the future of your business, and in many cases, the future of your family, is dependent on your answer.

If you are like the hundreds of small business owners I have coached, I can predict your answer to be, “No, my business cannot run without me!” Well, then you have a choice. You can continue to believe that you are invincible or you can get your head out of the sand and begin to do what is needed to ensure the survival of your business in the unlikely and unfortunate event that you are “out of action.”

What is needed you ask? The answer to that question is easier than you think. You basically need two things: systems and people.

Systems: Having a documented and clear understanding of your company’s work flow process and a repository of all systems that make up the steps in the process. These systems collectively would make up your operations manual and employee training manuals.

People: This speaks to having the right people in the right positions that are capable to develop, manage and/or deploy the systems.

Sounds pretty simple, doesn’t it? Well, it’s quite the opposite.

The whole idea of becoming a systems-based company can be overwhelming and all consuming. The skills to identify the best people for key positions can be equally challenging. And both tasks will require a lot of work to complete.

But think of the alternative, no systems in place, and the wrong people in charge and you not around for six months. This increases the possibility of your business failing.

So I ask you one more time, “Can your business survive without you?” If the answer is still no, then you need to seek the advice of a professional to help draw up a

succession plan.

Ruben Estrada is president and CEO of Estrada Strategies, a CEO Coaching Franchise for small and medium-sized businesses. He can be reached via 909-476-3510 or Ruben@EstradaStrategies.com.

In order to grow while maintaining efficient operating systems and quality standards, it is important that CEOs, executive managers and business owners clearly identify and understand the flow or movement of information and materials that make up processes within their business.

The daily demands for sales, customer service, operations, administration, finance and information technologies can easily create a piece mill business patched together by necessity, demand or a culture of reactive management.

As a result, job responsibilities for employees become unclear, duties get duplicated and the business gets littered with inefficiencies and redundancies causing frustration at all levels and problems getting the work complete and delivered.

The business owners I coach often come to me with a challenge focused around a specific process or function within their business. One client approached me about his company’s challenge to keep up with the volume of quote requests.

In an attempt to understand the challenge, I asked the business owner to draw a flow chart of the estimating process. After about three attempts it became apparent that he could not.

If a business owner cannot describe their business as a process, they do not know their business.

A business owner can get a sense of their business processes and how efficient they are by plotting out the flow of work from beginning to end in a flowchart.

This allows you to document and visually represent how tasks are being completed, locate critical stages of the process and identify problem areas.

To create a flowchart start by brainstorming the tasks and actions that make up a process. Write them in order of occurrence and map them out by linking them together with an arrow to show the direction of flow. The chart should include the employee responsible for each task, what resources they need and the amount to complete the given task.

In doing so, you will identify redundancies, opportunities for efficiencies, clearly define job duties and responsibilities and develop a master flow chart that can be revisited by all employees to help them see the entire business and the impact their positions have on quality.

Although this can be time consuming, a flow chart will help improve business processes and allow companies to grow efficiently with demand.

Many small business owners do not have large HR departments to handle the interviewing process and so they handle these issues by themselves. Business owners may be tempted to make a quick decision, just to get a warm body to fill an opening, but I caution against this.

Hiring an employee is a major financial outlay, and it can be more expensive if you make a rushed decision.  When I was working in the uniform rental business I did a study with our HR department on the cost of hiring an employee, who ends up being let go six months later.  The study estimated the cost of a bad hire was about $130,000.

I encourage my clients to use behavioral interviewing, which focuses more on how the interviewee has handled past situations. Behavioral interviewing suggests an employee’s past is an indicator of how they will perform in the  future. If an employee was president of his high school class, and president of his fraternity, it shows he is ambitious and geared towards leadership positions.

One of the strategies I have suggested is the Situation Task Action Results and Evidence  (STARE) process. When interviewing an employee, the business owner needs to ask them about past situations, what tasks where they responsible for, what actions did they take to solve problems, what were the results of their action and, most importantly, what evidence do you have of your past successes. If you were a top salesman, you should have awards, plaques, letters of commendation and statistics showing off your achievements.

I once interviewed a salesman who came into the interview with a box full of awards and commendations. However, it is amazing how many people misrepresent them in interviews. Many employees will say they graduated from an Ivy league school, but when you ask them to show the certificate they disappear.

Here are some other tips I recommend for a successful interview:

• Standardize the interview process. Welcome interviewees by name, offer them a drink of water and introduce yourself to the interviewee.
• Explain how the process is going to work. Tell the interviewee this is going to be a behavioral interview where they are going to be asked to provide examples of how they handled past scenarios.
• Give the interviewees deadlines. Tell the interviewee when you plan to fill the position and how you plan to notify them of their status. Even if you don’t hire someone, send them a letter thanking them for their time. The employee may not be right for the current job, but they could be right for a future opening. It is always good to keep the lines of communication open.
• Close the interview. I recommend that you walk all of the interviewees to the door and offer them a handshake. Also let them ask questions and inform them of the next step. Tell them when they will be contacted for a second interview.

Lastly, I also recommend business owners and managers interview in teams. Have at least one other person sit in on the interview. It is easy for one person to be overwhelmed by a charismatic interviewee (male or female) and make a decision based on emotion not logic. The company usually pays the price for this six month down the road, when they have to terminate the employee and begin the interviewing process all over again.