Melvin Lang AGA (SA)
Navigating Succession Planning

In episode 3 of the SAICA Biz Impact Podcast, Melvin Lang, the Director of ML Eco Projects, shared his journey and the importance of succession planning for small and medium enterprises (SMEs). Hailing from the small mining town of Dingleton in the Northern Cape, Lang’s story is one of resilience and dedication to uplifting his community through sustainable business practices.

Melvin Lang’s path was shaped by the challenges faced when his hometown of Dingleton was relocated by Anglo American for mining expansion. Rather than moving away to start anew, Lang chose to stay and fight for his community’s future. He leveraged his skills as an accountant to support local SMEs, helping them grow and become sustainable. As he shared, “Instead of fighting, I decided to use my skills to assist our local SMEs in the area of KATU.”

The Essence of Succession Planning for SMEs

Succession planning is often perceived as a strategy reserved for large corporations, but Lang emphasized that it is equally vital for SMEs. He pointed out that many business owners overlook the importance of planning for the future, which can leave their businesses vulnerable. “A succession plan is a strategy to safeguard your business,” Lang explained. “It helps your business navigate through obstacles and ensures it reaches its goals.”

According to Melvin, one major reason SMEs fail to implement succession plans is a lack of knowledge. Many SME owners start their businesses out of necessity, rather than opportunity, and may not have the expertise to develop a long-term strategy. Additionally, he noted, “Procrastination is another factor—business owners know they should plan for the future, but they just don’t do it.”

“If you’re in business, the time to start thinking about succession planning is immediately.” He stressed that unforeseen circumstances can occur at any time, and having a succession plan in place is crucial to ensuring the business can continue operating smoothly.

He also outlined several key elements that should be considered when developing a succession plan:

• Short-term and Long-term Goals: Business owners need to define what they want to achieve and how they will get there.

• Growth Plan: A clear plan for business growth should be established, as comfort with the status quo can hinder long-term success.

• Key Personnel: Identifying and training potential successors is essential, as is ensuring that there are plans in place for the unexpected loss of key staff members.

• Business Valuation: Knowing the current value of the business is crucial for future planning, especially if the business is to be sold.

• Legal and Tax Considerations: Proper legal frameworks and understanding tax implications are vital to avoiding penalties and ensuring smooth transitions.

Choosing a successor can be challenging, particularly when emotions are involved. Lang advised that successors, whether family members or employees, must share the same vision and mission as the current owner. “You want to leave a legacy,” Lang emphasised, “and that legacy should continue in your business.”

In closing, Melvin addressed the issue of confidentiality in succession planning. While transparency is important, the specifics of succession planning do not necessarily need to be broadcast to the entire company. However, it is crucial to handle the process with care to avoid internal politics and unrest.