Most startup executives just assume the founding management will be there forever, things will always go perfectly to plan and there really isn't a reason to think about succession planning, especially for a young business. A faulty assumption, in my opinion. At all times, regardless of the size of the business, you need to think about who will take the reins for each role within the company, in case any current manager disappears for whatever reason (e.g., fatal accident, quits, termination). And, more importantly, making sure any transition will be as seamless as possible, both in good times (with departing manager cooperation and involvement) and in bad times (without such support).
To successfully think about your succession planning, I think it comes down to the following categories: (i) hire subordinates that can fill your own shoes some day; (ii) share key information and train your potential successors on things they will need to know to be successful in your job; (iii) make sure all key procedures in the business are well documented, for followers to use as a "blueprint", if needed; and (iv) foster this "succession planning" philosophy into all employees within the organization, from top to bottom. I will talk about each of these topics below.
I always recommend hiring the best talent possible, regardless whether or not they are smarter than yourself (as some people are intimidated by the potential of looking stupid, and steer clear of such situations). Not only will the business perform better with A+ talent while you are still involved with the business, but having A+ talent "in the wings" is exactly what you want to fill your shoes in your absence. So, to me, succession planning definitely starts with hiring the right people, with a long term vision in mind.
Now that you have the best "successor potential" talent in your organization, you need to mentor them along and train them on key areas of the business. Not only train them on the skillsets they will need for their own job, but you need to keep them well versed on your own role and key things they will need to know to potentially step into your own job someday. The employee will be excited about learning new skills that improve their knowledge base, having your trust and the long term potential for promotion. And, the company will be much better off having a "backup QB", ready to come in off the bench, if the "starting QB" goes down.
In addition to having great talent in the wings, you need to make sure key information and procedures are well documented. There should never be a single point of failure in a business, where all relevant information is lost with the departure of any one person. So, think about what information and process is most important to each role in your company, and have employees train their "backups" with such information (e.g., key passwords, key procedures, key relationships, key contacts, key reports, key systems). And, keep a copy of all documented "backup" information and procedures with your head of HR in a centrally accessable place (as a double backup, if ever needed).
And, don't forget, we are not only talking about replacing a CEO or other C-Level manager here. We are talking about fostering this philosophy all the way through the entire organization, for all jobs from top to bottom. So, it is up to the senior execs to not only use these practices, but to communicate how important it is for their subordinates, to do the same.
My rule of thumb is: what happens if that person gets hit by a bus and doesn't come back to work. Make sure the company has the back up talent with "blueprint" in hand, to continue operating at full steam ahead. And, it is much easy to gather and document this "blueprint" during the "good times", when you least need it.
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