Family business succession is sometimes a taboo topic as it is read as code for ‘you are getting old’. But failure to act at the right time can be fatal to the viability of a business.
Placing discussions about the future of the business as priority topic is often challenging, and considered something that can always wait. But this approach can be fatal for many reasons.
Here are five truths about family business succession:
- First truth: Planning for succession must always be a priority and should never be on a to-do list. It must be an active topic that is planned for from the day a business commences, and continually reviewed and invested in. Succession is a key element underlying the capital value of a business – regardless of what you intend to do with the business. And the capital value of your business is not something you want to leave to the last moment or chance. I define capital value as the ability of a business to earn an enduring income and, therefore, something you must invest in continually.
- Second truth: The unexpected does happen and many businesses, and families, have been caught out by the unplanned ‘exit’ of a key person in the business. And the remaining family are left to sort out the mess and try to extract value from a business that was not prepared.
- Third truth: Succession is never about a person. It’s never about the incumbent leaders and their role in the business, or the next generation wanting a go. It’s solely about the business and what is required to ensure its continuing future – whether that is a sale, transition or introducing external management.
- Fourth truth: The list of actions the current leadership team want to complete before stepping aside will never be completed. Don’t put off acting on succession because you just want to get ‘a few more things’ done so the business is ready to handover.
- Fifth truth: As an incumbent leader you will grieve over the loss of your role in the family business; expect it and plan for it. And the next generation will never be as ready as you want them to be, and they can’t be until you have stepped aside and given them their turn to lead.
The right time to make sure the succession of your business is well planned and advanced was yesterday. So, if it’s not, then start today.
Active Knowledge Question:
- Who is ready to step into your leadership shoes at a moment’s notice?
Act Now
Searching for the world’s best family business succession guide? Buy Transition – Orienteering The Five Lands of Succession.
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All the best in the success of your business,
Richard Shrapnel
