So, how many of you contacted me, your financial planner or your exit strategist to begin working on your family business succession plan?
Remember that statistic- just 18% of family owned businesses have a robust family succession plan? The PwC study can be found here: 2019 PwC Family Business Survey.
Okay then, I’d like to urge you to add these recommendations to your toolbox once you begin to work on your succession plan.
These steps will provide the framework for conversations that will get you started.
#1 - Acknowledge the risk in subjecting personal relationships to business. Many people find that creating a working partnership with someone they love is a safe bet. BUT, there is so much more to a partnership than familial love. As with any working relationship that intersects with a personal relationship, we advise transparency, clarity, developing a strong relationship with difficult, uncomfortable conversations.
#2 - Examine alignment among family members examining goals, values, purpose and mission. A LACK OF SHARED VALUES: Get to your WHY. Misaligned values, goals, and vision set the stage for an organization to get stuck in the past.
#3 - Closely determine if there is an UNEQUAL COMMITMENT to the company. Example- sweat equity v. cash investments.
#4 - Discover if the definition for success is the same for the current CEO, the future CEO and the Board. Trying to navigate through a LACK OF A COMMON MEASURE OF SUCCESS: this condition leads to instability and an inability to respond decisively to market fluctuations, as well as to changing circumstances within the family.
Here is an HBR article that may provide additional motivation for you to get started, “Avoid the Traps That Can Destroy Family Businesses”. There’s that old adage, “you don’t know what you don’t know”. Knowing some of the traps, as well as some of the steps to get it right- equips you to navigate successfully.
Okay, let’s continue this next week with Part III of Family Business: The Right Kid for the Job. I will share recommendations 5-7 with you. Reach out to me, Wendy Dickinson, if you would like to schedule a get acquainted call to determine the support you need to get started on your plans to transition successfully. My email address is email@example.com, or call me at 804.372.7575.