Succession Planning is The Key to Business Survival
The common business issue: Only one in three family businesses, survive the second generation. Only one in ten, survive the third generation. Most experts attribute this failure to the incredible complexity of bringing family relationships into your business. We will assist in reviewing your operations and communications systems to put you on the right track. Here is what you need to focus on:
- Evaluation and Problem Identification
- Attracting the Next Generation
- Conflict and Dispute Resolution
- Organization and Governance
- Succession Planning
- Estate Planning for the family business
You are well advised to take charge of your own exit plan
For the small business the founder should establish a clear exit plan at some point. After all, we all exit sometime. The question is: “Are you deciding what your exit plan looks like or is someone else?” Just some of the choices in a successful transition to a new phase in your life are a family succession process or selling the business to an outside organization. But how do you make those decisions to bring the best results for everyone involved. The problem becomes when the "Board" meeting is held around the Thanksgiving dinner table and the tensions run high. How do you keep your family together and make sound business decisions?
If you choose and want to have a member of your family take over the business from you, then being in a family business will have several challenges to accomplish that task.
- Seniority, rank, and gender are sometimes confused with real leadership.
- Children in family businesses are often raised in a culture of wealth and entitlement and don't have to face challenges.
- The second generation has often been raised by entrepreneurs who don't encourage leadership development and are not good mentors or patient teachers.
- There is often the desire to 'clone' the next generation to be just like the first, even though very different skills are needed to run an older stage company.
- Often family roles and birth order get in the way of developing leadership skills. For example, the youngest, who may have the most potential, may be treated "like the baby" even as an adult.
- Brothers and sisters are often reluctant to grant authority to their siblings and sabotage their sibling leader.
Training or educating the successor in the firm is a delicate process. Many times a parent finds it difficult to train a child to be successor. If so, an alternative trainer may be found within the firm. Usually, an owner wants to assess a successor in the following areas:
- Decision-making process
- Leadership abilities
- Risk orientation
- Interpersonal skills
- Temperament under stress
The entire succession plan needs to be thought through. Your TalentValue adviser can be a strong catalyst in helping to craft a good plan of action.