One of the most important factors that contributes to the survival and continuation of a family business is a well-thought-out succession plan. We know that those who are running a family business today will not be able to continue in their role forever. If the family wants the business to survive for many decades into the future, the time to start planning for eventual succession is today, and not after few years when the current team is near retirement and the next generation has lost its prime years.
Family business succession requires active collaboration from every family member who is currently involved in running the business. It cannot be decided in isolation by few senior family members in a closed-door meeting. The process should call for participation from everyone and make them 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 the continued economic success of the business, and not about who will have which designation and which office.”
Transferring control and roles within a family business is a complex process. In an utopian world, the present leaders should come to terms with the fact that they are near retirement. They may publicly say that they are ready to hand over the reins to next generation but giving up control and letting go can be a difficult transition. Therefore, advance planning for eventual business succession is essential.
Transition is a time-consuming process
The best family business succession plan is implemented over many years. The successors need to get inducted and learn their eventual roles well ahead of the actual transition. It needs time for training and knowledge gathering. It is advisable that the successors should work in other business at least for a few years. An outside mentor or a senior professional board member can help teach accountability and responsibility to prepare the family business successors for the management role that will eventually be passed to them.
Develop a Timetable
It is important for the successors to understand the financial aspects of running a family business before being put in charge. Otherwise this weakness can lead to the demise of a family business. This is one of the reason that makes family business succession planning important. Hence a written plan with a timetable that marks when key events needs to be developed, which helps measures benchmarks. A family member needs to be assigned for making sure the business adheres to the plan.
Does Your Family Business Need Help?
With extensive hands on experience of assisting family businesses, 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 orientation programs, one to one as well as common meetings, workshops, public talks, mentoring, coaching, Family retreats and private family business consulting services, we help family business owners chart their way through family business issues of all shapes and sizes.