Family Business Succession Planning
One of the most important factors that contributes to whether a family business will survive and thrive generation after generation is a well-thought-out succession plan. Inevitably, those who are running a family business today will not be able to continue in their role forever. And if the family wants the business to survive for many decades into the future, the time to start planning for eventual succession is today, not in a few years.
Successful family business succession planning requires the collaboration of every family member currently involved in running the business. A succession plan is something that should not be decided by one or two family members during a closed-door meeting. Instead, everyone should participate and be aware of the plan. The goal is for the family business to succeed, and the most effective way to guarantee success is to embrace the succession process as something that will take time and dedication.
“Succession is about continuity of the business as a viable economic unit, not who sits in the corner office. It is possible that a non-family professional is the best person to sit there.”
The Little Red Book of Family Business: Page 97
Planning Ahead for Business Succession is Vital
Transferring control and roles within a family business is not always a simple task. In a perfect world, the current leaders of the business are able to come to terms with the fact that they are near retirement or are voluntarily leaving the company for another reason. And although current family business leaders may say they are ready to hand the reins to other family members, ultimately giving up control and letting go can be a difficult transition. This is precisely why planning years in advance for eventual business succession is imperative.
Succession Planning is a Process that Can Take Years
In most cases, the best possible family business succession plan is one that can be implemented over the course of many years. When there is time for successors to learn their eventual roles well ahead of the actual transition, there is ample time for training and knowledge gathering. If possible, successors should spend time working in an environment other than within the family business for a period of at least a few years. An out-of-family-business professional experience can help teach accountability and responsibility and can help prepare the family business successors for the management role that will eventually be passed to them.
Create a Written Succession Plan with a Timetable
It is not uncommon for family business successors to not fully understand the financial aspects of running a family business before being put in charge. Unfortunately, this can lead to the demise of a family business. This is just one reason that family business succession planning is so essential. The most successful family business succession includes a written plan with a timetable that marks when key events will happen and it also measures benchmarks. Also important is assigning a family member who will be responsible for making sure the business adheres to the plan.
Does Your Family Business Need Help?
Family Business Matters has extensive experience assisting family businesses in the development of Family Business Succession Planning strategies. With many decades of experience, we understand the wide variety of challenges that families face as they work together to build, grow and sustain a thriving family business generation after generation. Through conferences, continuing education programs, family business retreats, speaking engagements and private family business consulting services, Family Business Matters has assisted more than 450 family-owned businesses around the world chart their way through family business issues of all shapes and sizes.
For more information on how Family Business Matters can help your family business survive and thrive, please contact us today at (970) 948-5077.