All businesses need to have plans in place for the future. In a family business, this can be much more challenging, unless care is taken to cover all the bases well in advance.
Where continuity of family ownership is one of the purposes of the business, time needs to be taken to ensure that family succession works.
Whilst there are many actions that can be taken to make sure that the legacy of the family business is maintained, there are three key components to factor in as a matter of course.
Secret 1 – Start Early
Many family businesses are met with challenges that come along unexpectedly. Be they critical factors or not – like the untimely death of a key family member, or where family members seriously disagree – preparation is the key.
By preparing planned courses of action with clear goals and time-scales, it can be much less damaging should a crisis occur.
Because of the nature of family business, with generation following generation, preparation for those who will take over eventually can begin quite early on, as long as this is tailored to the ages of those individuals involved.
The best time to start is as soon as possible, before you perceive even the merest hint of issues arising. The worst time is waiting until the last minute.
Secret 2 – Dropping Dead!
Irrespective of the planning you do in the good times, there will always be the need for a process should a key family business member not make it in one day.
It could be a short period where they are ill and there will be the likelihood of return. It could be more serious with an extended period of absence; of it could be the unexpected death of a key figure that throws the business into dangerous territories.
Even with the best long-term succession planning in place, every family business needs to have a process that is clearly understood by all in the senior team should one of them go missing for a while – or longer. It needs to be robust; tested and viable and needs to be well communicated to all stakeholders whether working in the business or not.
In times of stress such like serious illness or even death, the business must go on – and this process needs to be in place well in advance of being required so that the business is not damaged.
Secret 3 – Step Back
Because of the nature of a family business, it can sometimes be difficult to be objective. From entrepreneurs who start a business to generations who take over from parents and even grandparents, they all have emotional ties to what is, quite simply, a business.
It can be difficult to separate the boundaries of what is a good vision for the future of the business if you aren’t able to be very objective indeed, so often there is value in bringing in a specialist to help.
There are many organisations out there who can be constructively supportive, whilst not being afraid to ask the most demanding questions of existing key personnel. Where such specialists add value is with their absolute focus of the right succession plan for the business, not for the emotional ties that so often get in the way.
Three secrets to succession planning success. If a family business is strong enough to address the three issues here, they will be well on the way to ensuring the health of the business well into the next generation.