Preparing The Family Business For Its Next Move
Succession planning is important for every family business owner. For many, the family business is a legacy vessel that is built and embarked on with hopes and aspirations that you will pass the baton to your children when you exit. In other cases, the family business only lasts one generation and will need to be successfully sold when you exit.
Regardless of which camp you are in, succession planning is critical. Who will take the reins? Who can I trust? What is tied to the “reward”? Who is tied to it? Will my children be capable and or willing? What do you do if your child is not a realistic option?
Congratulations to those with a child as a potential successor. It will be essential to communicate the concept of successor development and introduce them to the concepts of commitment, competency, community-mindedness, and character. The acknowledgment and acceptance of these components will be very critical as they engage in professionally developing themselves among their peers and colleagues within your business and community. In most cases, your child will show natural talent with respect to understanding the inner workings of human capital. Other owners may deal with interpersonal challenges that affect the development and progress of a successor candidate which can require detailed attention to creating a strong bench strength of key managers. Bench strength is imperative where successor strength fails.
Ultimately, if all works as planned, the benefits are immense. You have a trusted successor that is leading your business into the next generation and who will potentially lead into the third generation. You have a “blood” family member in the game and true connection to your family legacy, you have a sense of confidence that you can intervene when issues arise with your child’s leadership, and you’ll have the approval of your spouse and other family members because they are not foreign to family.
But what if you don’t have a child, your child is pursuing other career options, or they were not a fit for the business? Some first-generation multi-unit franchisee owners who started their business from bootstraps perhaps would struggle with the concept of “letting go”, especially to a non-family member. However, there are solutions to this. You can create a unique opportunity for a “Very Special Key Manager” to rise to the opportunity and serve as a contingent successor, an equitable key manager with or without buyout, or even have a group of your top performers collectively participate in an ESOP.
With all the options on the table, you may be able to achieve succession beyond your lifetime of ownership. With or without direct family members, succession planning is not a project but a long-term commitment to perpetuating your legacy through the next generation of owners and managers.
Jéan Venant is a succession advisor with The Rawls Group – Business Succession Planners. With over 45 years of succession planning experience across a multitude of industries, The Rawls Group has developed a time-tested process to address any issue impacting the current and future success of the business. For more information visit www.seekingsuccession.com or email firstname.lastname@example.org
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