Is your business prepared if a key leader suddenly leaves or retires tomorrow?
Do you have a plan in place to develop your next generation of leaders before it’s too late?
No matter the size of your business, succession planning is essential to ensuring continuity and long-term success. Without a clear plan, even a single unexpected departure can disrupt operations, slow growth, and put your team and clients at risk. Planning ahead gives you the confidence that your business can continue running smoothly, regardless of changes in leadership or key roles.
This guide is designed to help small business owners understand the fundamentals of succession planning. We will explain why it matters, outline the steps to create a strong plan, and highlight best practices for preparing future leaders. To make it even easier to get started, we’ve included a free succession plan template that you can customize for your organization and begin building a secure, stable future today.
Fill out the form below to download our Free Succession Plan Template!
H2R's Fool-Proof Guide to Creating a Business Succession Plan for Ontario Small Businesses
1 – Identify Key Leadership Roles
The first step is understanding what leadership positions need to be part of your succession plan.
It’s impossible to have a plan for every leadership position in your company structure, so it’s important to weed out the ones of less importance early on.
For example, you wouldn’t typically create a succession plan for every lower management role. Focus on the core positions that influence the decision-making and operations of your business and go from there.
Some examples of leadership roles that typically have a succession plan in place include:
- Chief Executive Officer (CEO) – to ensure continuity in vision and strategic direction.
- Chief Financial Officer (CFO) – to maintain financial stability and investor confidence.
- Operations Manager – to keep daily operations running smoothly during transitions.
But keep in mind, succession planning isn’t limited to executive positions. Any role that’s critical to business continuity, decision-making, or specialized expertise can benefit from having a successor identified and trained in advance.
2 – Identify Potential Successors
Once you’ve determined the most important leadership positions in your business, take the time to think through what capabilities and values each one requires. Use your understanding of each role’s needs to determine people who could succeed in the role — whether they are people within the organization, external candidates, or even family members.
In many cases, we see business leaders go straight to the next person in the chain of command for succession, like choosing the Director of Finance as the successor for the CFO.
It’s understandable to look here first, but just because they’re close in authority doesn’t always make them the best candidate. The best successor is someone who demonstrates the right mix of vision, capability, and alignment with the company’s future goals. That person won’t always be the “second-in-command”.
3 – Talk with Your Chosen Candidates
A step which many skip, but we believe might be the most important of all, is talking to the candidates for succession. Book a meeting with each candidate 1-on-1 to discuss their career goals, and if they see themselves taking on these higher leadership roles within the company.
Having a meeting to assess a candidate’s fit is crucial. They may seem like the ideal candidate from an outside perspective, but speaking with them 1-on-1 can give you an opportunity to better understand their mindset and commitment to the company. It’s especially important as succession isn’t just about skills or experience, but also value alignment.
It also can do more for you than weed out unfit candidates. You can also ask them about where they feel they need to improve in order to take on a bigger role within the company, which will guide leadership development and training later on.
4 – Develop a Training Plan
Once you have identified successors, create a training plan to prepare them for leadership roles. This can include mentoring, job shadowing, and formal training programs. Investing in the future leaders of your business is necessary for a smooth transition.
If you haven’t discussed leadership gaps with your candidates already, now’s the time to do it. It’s not effective to apply the same training model to every person. You should keep a record of each candidate’s key skills and areas for improvement to help them build the skills they need for true success.
We can help with expert-led leadership development training!
5 – Create a Transition Timeline
Establish clear timelines for when leadership changes will occur. This timeline should include milestones for training and development, as well as when you expect succession to start. Having a schedule helps everyone stay on track and prepares the business for change.
6 – Communicate Your Succession Plan
Your key stakeholders (employees, investors, family members.etc) will need to know how succession will work and what to expect once it happens. Failing to communicate your succession plan will lead to uncertainty and mistrust once your business starts transitioning. That’s why consistent communication about succession is needed to provide much needed clarity and enable stakeholders to accept and welcome new leadership.
7 – Review and Revise the Plan
Regularly review and update your plan as your business evolves. Often, people who were once succession candidates will leave the company and force you to rethink your succession strategy. Changes in the industry and market can also necessitate changes to how succession works.
Make a regular reminder to return to your original succession plan, as it’s easy to be unaware of or forget when changes need to be made.
Why Is Succession Planning Important?
Succession planning is important because it helps organizations prepare for future changes in leadership and key roles. When someone leaves a position, retires, or moves to another department, the business should be able to continue operating without disruption. A solid succession plan reduces the risk of sudden gaps that can affect productivity, customer service, and overall stability. It also supports long term growth by ensuring the right people are ready to step into critical roles when needed.
For Ontario and Canadian employers, succession planning is also an important part of meeting HR and workforce management expectations. It helps businesses identify internal talent, provide training, and build a stronger, more reliable team. This type of planning supports employee retention, reduces hiring costs, and helps maintain compliance with workplace policies and legislative requirements. When used properly, succession planning becomes a key tool in protecting the future health of the organization.
It also creates confidence among staff. Employees know there are opportunities to develop and advance, which encourages engagement and long term commitment. A clear plan shows that leadership is thinking ahead and taking responsibility for the sustainability of the business.
Did not find the information you were looking for? Our FAQ section to the right below covers more common questions to help you understand how succession planning supports a stronger and more compliant workplace.
Ready to Successfully Plan Your Succession Plan?
At H2R, we're experts in assisting businesses build proactive and comprehensive succession plans that ensure your company is in the right hands well into the future. Contact us today to help secure your business' future.
Succession Planning FAQ's
What is succession planning?
Succession planning is a structured approach that helps a business prepare for future changes in leadership or critical positions. It involves identifying essential roles, assessing current employees, and building the skills needed for someone to move into those roles when the time comes. By planning ahead, organizations can avoid sudden gaps, protect business continuity, and create a steady pipeline of trained talent. This process also supports long term stability and reduces the risks that come with unexpected turnover.
What are the 7 steps in succession planning?
The 7 steps on succession planning (as outlined in this article) are:
- Identifying key leadership roles
- Identifying potential successors
- Talk with your chosen candidates
- Develop a training plan
- create a transition timeline
- communicate your succession plan
- Review and revise your plan
Following this 7-step plan is the optimal way to ensure your succession plan is clear, concise, and easy to follow whent he time comes.
Why does succession planning matter?
Succession planning matters because it protects a business from disruption when key employees leave, retire, or change roles. Without a clear plan, organizations can face delays, lost knowledge, and costly recruitment challenges. A strong succession approach ensures that critical positions have trained, capable people ready to step in, which keeps operations stable and reduces risk.
It also supports long term growth. When employees see a path for advancement, they are more engaged and more likely to stay. This improves retention, strengthens internal talent, and helps the organization maintain a competitive and reliable workforce. Succession planning ultimately creates a healthier, more resilient business that can handle change with confidence.
Does my company need a succession plan?
Yes, every company can benefit from having a succession plan, no matter the size or industry. If your business relies on key people whose knowledge or skills would be difficult to replace, a succession plan becomes especially important. It helps you prepare for retirements, promotions, unexpected departures, and growth-related changes.
A succession plan also supports smoother operations and reduces the risk of scrambling to fill important roles at the last minute. Even small businesses in Ontario and across Canada gain stability by identifying who can take on future responsibilities and how those individuals will be trained. Having a plan in place protects your business, your employees, and your long term goals.
Do I need an HR company to build my succession plan?
You do not necessarily need an HR company to create a succession plan, but working with one can make the process much easier and more effective. Succession planning involves assessing current talent, identifying key roles, and building training and development programs to prepare employees for future responsibilities. For many businesses, especially in Ontario, this can be complex and time-consuming.
Partnering with an HR company like H2R ensures your succession plan is tailored to your organization, aligns with HR best practices, and meets compliance requirements. Our team can help you identify potential leaders, create actionable development plans, and implement a strategy that keeps your business running smoothly no matter what changes occur. By working with professionals, you can save time, reduce risk, and have confidence that your plan will truly support the long-term success of your organization.
What are some things I should consider when making a succession plan?
When creating a succession plan, there are several important factors to consider to make it effective. First, identify the key roles that are critical to your business’s operations and long-term success. These are the positions where a sudden vacancy could cause significant disruption.
Next, assess your current employees to determine who has the potential to step into these roles. Consider their skills, experience, and readiness, as well as any gaps that may need to be addressed through training or mentorship.
It’s also important to establish clear timelines and development plans. Decide how long it might take for someone to be prepared to take over a key role and what steps they will need to get there. Finally, regularly review and update your plan to reflect changes in your business, workforce, and industry. A well-thought-out succession plan ensures continuity, reduces risk, and supports the growth and stability of your organization.
Who is responsible for succession planning?
Ultimately, responsibility for succession planning lies with company leadership, including owners, executives, and HR managers. They set the vision, identify key roles, and make decisions about who will be developed to take on critical positions. However, many organizations find the process challenging without specialized guidance.
Working with a team like H2R can make succession planning far more efficient and effective. Our HR experts help assess your workforce, identify future leaders, and create development plans tailored to your organization. We guide you through the entire process, ensuring your succession plan is actionable, compliant, and aligned with your business goals. Partnering with professionals allows your leadership team to focus on running the business while knowing that your succession strategy is built to secure the company’s future.
What are some common mistakes during succession planning?
Some common mistakes during succession planning include failing to identify the right key roles, overlooking potential internal talent, and not providing adequate training or development for future leaders. Companies also sometimes create plans that are too rigid, which makes it difficult to adapt when unexpected changes occur.
Another frequent issue is leaving succession planning solely to top management without involving HR or external experts. This can result in gaps, bias, or incomplete preparation. Working with H2R helps businesses avoid these pitfalls. Our team ensures your succession plan is comprehensive, realistic, and tailored to your organization, providing the guidance and structure needed to develop capable leaders and maintain business continuity.
What does a successful succession plan look like?
A successful succession plan is clear, actionable, and aligned with the organization’s long-term goals. It identifies critical roles, pinpoints potential successors, and outlines the training, mentorship, and development needed to prepare those employees for future responsibilities. The plan should also include timelines, review schedules, and measurable milestones to track progress.
In addition, a strong succession plan is flexible enough to adapt to unexpected changes, such as sudden departures or shifts in business strategy. Working with H2R ensures your succession plan is thorough and practical. Our experts help you design a plan that develops talent, maintains business continuity, and gives leadership confidence that your organization is prepared for the future.
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