Succession is one of those tasks that is often deferred as there are always more pressing issues, and there is, of course, plenty of time to address it. But the reality is often far from this mindset, and many family business leaders have found themselves left behind.
Active Knowledge Question:
How far along are you with your succession plans and implementation?
The Twelve Dangers
There are many dangers that the traveller must be wary of and keep a close eye out for. Not only must they avoid these dangers but be proactive in protecting against them.
Danger: 2/12 – Darkness – Is A Path To Nowhere
The traveller has failed to act quickly enough and has been left behind while everyone else has begun their journey to the summit.
There is a real danger in simply being left behind as your peers move forward with their succession plans and you do not act. Succession is not optional, at some point in time you will need to release your management and ownership of your business. As in all things, it is better that you actively plan for and manage the timing to maximise your return no matter what succession option you may select.
Inaction may arise simply through a sense of invincibility or an inertia as you do not know where or how to start. The most common trigger in succession is an advisor promoting action; if you are uncertain where or why to begin, engage an advisor earlier rather than later.
Even in succession, there exists a competitive playing field for resources, for example:
- The new CEO you wanted to step into your business has taken another offer.
- The children who were interested in following in your footsteps never did as you did not engage them with the opportunity.
- Your best option for a sale has expired as they just purchased another business.
- The market has moved against you and profits are not what they used to be.
For those of the Baby Boomers generation (born between 1946 and 1964) the years 2020–2025 is a critical period. The bulk of this generation will reach their 70s and will likely be seeking to transition their businesses. Resources will be limited, and those who were slow off the mark may find themselves with literally a path to nowhere.
Succession is an area where the first-mover advantage is real and possibly permanent.
Quote From A Traveller:
“The complexity is that everyone involved in a family business must come to understand the importance of having a succession plan” – From A Family Business in Peru.
Part 2 of the series: 12 Dangers To Be Avoided In Succession
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All the best in the success of your business,
Richard Shrapnel
