The benefits derived from being a family in business will vary depending on the makeup and size of the family as well as its stage of evolution (i.e., first, second, or third generation).
The problems and resistance associated with developing
a viable, coherent, and agreeable succession plan are immense. For the family
business owner, the ability or willingness to manage and direct the
interactions between the extraordinarily complex areas of personal, family,
management, ownership, and estate issues can be daunting.
Moreover, these issues are often further obscured by,
or in conflict with, other family members’ personal wants and needs. Add to
that the owner’s possible fear of losing control and position, both in the
business and in the family, and it’s no wonder then why avoidance and denial
are the principle responses to succession planning.
In working towards the desired succession outcomes, the process or discussions may become stalled or challenged due to the number and sensitivity of management and ownership issues, and the corresponding number of possible outcomes. Decisions may affect not only the future of the business, but in many respect the future of the family as a family unit.
Identifying long-term strategies and developing
corresponding operational plans will clarify for a business where it wants to
go and how it will get there. Succession of a family business really includes
the strategic transition of five distinct areas for business succession:
1. Business Succession , 2. CEO/Owner Succession , 3.
Management Succession, 4. Ownership Succession, 5. Estate Succession
They are helpful in development of a strategic plan
for succession. A strategic plan is simply a systematic way of asking key
business questions that are designed to create insights into the company and
the environment in which it operates. From those questions, strategies are
developed to meet those key goals.
Many family business owners are not very good at carrying out formal planning exercises. In fact, the majority of them don’t do it at all. They may not see the benefits... and therefore cannot seem to find the time for it. Often, when owners do carry out some form of planning it tends to be dominated by the owner(s) with little input from management or outside advisers. This lack of formal planning has often been cited as one of the major stumbling blocks in the successful management of the multi-generational family business.
To overcome this reluctance to plan, consider
assigning the task of organizing the planning activities to a senior
next-generation family member who is active in the family business and who
aspires to become a future owner. The need/desire to do some planning should be
tabled at a family business meeting and an honest discussion should take place around
the willingness to do the planning, who should participate, and what is
expected (outcomes) from the planning exercise.
There is no value in doing planning for the sake of
planning. The planning participants must feel comfortable that their views and
opinions will be taken seriously and what is agreed upon is intended to be
implemented.
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