The COVID-19 pandemic, which has seen business owners getting sick and sometimes dying, has highlighted the importance of succession planning for travel and tourism businesses.
“We often think that succession planning is something for large businesses to worry about but the reality is that a lack of planning in this regard can have even more catastrophic consequences for the SME and family-run business. This is because, for small family-run businesses, an entrepreneur who is suddenly out of action can mean the death of the entire company. As SMEs are the mainstay of the tourism industry globally, this is an important issue for our industry to address,” says founder of the SEEZA Tourism Growth Network, Septi Bukula. SEEZA boasts a membership of 100 SME tourism businesses, predominantly tour operators.
René Botha, Area Manager of specialist SME and risk finance company, Business Partners, says COVID-19 has really highlighted the importance of succession planning. “One of our entrepreneurs passed away recently, leaving his business without any formal succession plan in place. This made the banks unsure about the situation, resulting in the family having to sell properties and eventually close down the business.
“Often entrepreneurs will simply assume that their partners or children will step in to take over their businesses but these aren’t always the right people to run the business and they have rarely been properly prepared for the position,” adds Botha.
“We find that very few SMEs are even thinking about succession planning, placing it at the end of a long list of things to do that have to fall in place behind the daily challenges of running a business. However, what many business owners don’t realise is that succession planning is a governance issue and elevating governance within one’s business can help with other issues, such as funding, when investors look at your business,” says Bukula.
Botha agrees, saying succession plans keep businesses stable and give extra confidence to banks and a business’s creditors.
“We view succession planning as a king of ‘human resource insurance’, where SMEs make plans to thrive, even if the unthinkable happens. This helps with risk of sudden death, early retirement or dread disease. More often than not, in an SME certain roles and responsibilities are filled exclusively by specific individuals – such as the business owners themselves – which means that losing them for any reason can lead to a significant skills and resource gap that is not easy to fill. Whether it’s their technical knowledge, their relationships with key clients or their talent niche in the business, key replacement players can be critical to the survival of that business. As such, we always advise entrepreneurs to move forward with their succession plans when a business is still young and not when the entrepreneur is thinking about retiring,” says Botha.